Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

Exercise 23

The Bertrand Paradox relies on the assumption that the demand for any one firm's product is very responsive to pricing by the other firm. Why is this assumption crucial for the competitive results in the Bertrand model? How would those results be affected if consumers were reluctant to shift purchases from one firm to another because of consumer switching costs? What other assumptions are crucial for the Bertrand Paradox?