Bertrand competition with asymmetric costs: a solution in pure strategies

Abstract

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.