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Bertrand Competition
A model of oligopoly where firms compete on price rather than quantity, leading to potentially different strategic outcomes compared to Cournot competition.
Implications
A model in economic theory where companies compete on price, assuming that consumers will always choose the lower-priced option, leading to price wars and lower profits.
Example
Example: In the airline industry, low-cost carriers engage in Bertrand competition by continuously lowering prices to attract price-sensitive travelers.
Related Terms
Different from Cournot competition, where firms compete on quantity rather than price, Bertrand competition directly involves pricing strategies.
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