Comparing Cournot and Bertrand in a Homogeneous Product Market

This paper examines some general notions relating to the comparison of Cournot and Bertrand equilibrium outcomes. Results obtained by Vives in this connection are reconsidered in a homogeneous product market and it is shown that these results are sensitive to the market sharing rules. It is found that the results are always true under those market sharing rules which have the property of including the competitive equilibrium in the set of Bertrand equilibria (for example, the “capacity sharing” rule). If, however, the sharing rule does not have this property (for example, the “equal sharing” rule), then the results, referred to above, may not hold when costs are asymmetric.Journal of Economic LiteratureClassification Numbers: L13.