Bertrand and Cournot oligopolies when rivals' costs are unknown

Ferreira, Fernanda A.; Ferreira, Flávio

http://hdl.handle.net/10400.22/4396

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Authors

Ferreira, Fernanda A.

Ferreira, Flávio

Abstract(s)

We study Bertrand and Cournot oligopoly models with incomplete information about rivals’ costs, where the uncertainty is given by a uniform distribution. We compute the Bayesian- Nash equilibrium of both games, the ex-ante expected proﬁts and the ex-post proﬁts of each ﬁrm. We see that, in the price competition, even though only one ﬁrm produces in equilibrium, all ﬁrms have a positive ex-ante expected proﬁt.