We consider a Bertrand duopoly in which firms do not know the rival’s cost and choose their prices from a discrete set. Contrary to the case of a continuous strategic space, there might be multiple separating equilibria and a unique pooling equilibrium. The analysis shows the conditions under which a pooling equilibrium is more profitable than a separating equilibrium.
Colombo, S., Karakoc Palminteri, G., Pignataro, A., Bertrand Competition with Cost Uncertainty and a Discrete Strategic Space, <<GAMES>>, 2026; (17): 1-9 [https://hdl.handle.net/10807/348616]
Bertrand Competition with Cost Uncertainty and a Discrete Strategic Space
Colombo, Stefano
;Karakoc Palminteri, Gulen;Pignataro, Aldo
2026
Abstract
We consider a Bertrand duopoly in which firms do not know the rival’s cost and choose their prices from a discrete set. Contrary to the case of a continuous strategic space, there might be multiple separating equilibria and a unique pooling equilibrium. The analysis shows the conditions under which a pooling equilibrium is more profitable than a separating equilibrium.
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