We consider a Bertrand duopoly with homogeneous goods and we allow for asymmetric marginal costs. We derive the Myopic Stable Set in pure strategies as introduced by Demuynck et al. (Econometrica 87:111-138, 2019). In contrast to the set of Nash equilibria, the unique Myopic Stable Set can be easily characterized in closed form and it provides an intuitive set-valued prediction.
- Bertrand competition
- Asymmetric costs
- Myopic stable set
Demuynck, T., Herings, P. J-J., Saulle, R. D., & Seel, C. (2019). Bertrand competition with asymmetric costs: a solution in pure strategies. Theory and Decision, 87(2), 147-154. https://doi.org/10.1007/s11238-019-09698-4