On the efficiency of Bertrand and Cournot competition under incomplete information

  • Lofaro A
  • 11


    Mendeley users who have this article in their library.
  • 13


    Citations of this article.


Bertrand competition is generally viewed as more efficient in welfare terms than Cournot competition. This paper shows that, after introducing incomplete information about rivals' costs, this is not always true: in a homogeneous oligopoly where costs are uniformly distributed, the Bertrand price (output) is higher (lower) than that of Cournot, if firms have sufficiently low costs. Moreover, individual firms' ex ante expected profits as well as their actually realised profits are often higher in the Bertrand game. Finally, it is shown that, even when the Bertrand price is higher than the Cournot price, the Bertrand model may still lead to a higher level of social welfare than the Cournot model because it is more productively efficient. © 2002 Elsevier Science B.V. All rights reserved.

Author-supplied keywords

  • Bertrand
  • Competition
  • Cournot

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document


  • Andrea Lofaro

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free