publication . Article . 2012

ON PRICE-MAKING CONTRACTS AND ECONOMIC THEORY: RETHINKING BERTRAND AND EDGEWORTH

Robert R. Routledge;
Open Access
  • Published: 01 Jan 2012 Journal: Cahiers d'économie Politique, issue 63, pages 171-188
Abstract
A problematic issue in economic theory is the study of price determination. Two distinct approaches to this difficult topic have been taken: (i) in Bertrand competition it is assumed sellers enter the market with a commitment to supply all demand forthcoming from buyers (ii) in Edgeworth competition sellers quote prices with no commitment to supply more than their competitive supply. Both these types of market contract struggle to provide credible pricemaking foundations for perfect competition. In this paper we outline an alternative approach to contract formation with combines Bertrand’s [1883] insight regarding price competition with Edgeworth’s [1881] notion...
Subjects
ACM Computing Classification System: TheoryofComputation_MISCELLANEOUS
free text keywords: equilibrium, existence, core convergence, price-taking behaviour, market contracts., jel:C72, jel:D43
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