Price and quantity in Bertrand and Cournot models

Question

Quizplus · Accepted Answer

In Bertrand model, firms compete on price and in Cournot model, firms compete on quantity. Therefore, the price and quantity outcomes will be different in these two models. In Bertrand model, the price will be equal to marginal cost whereas in Cournot model, the price will be higher than marginal cost. The choice C is partially correct, as the price and quantity outcomes may be the same in Bertrand and Cournot models if the products are identical and the firms have equal production costs. However, this is a specific case and not a general rule. The choice D is also incorrect as the price and quantity outcomes depend on the model used, and not on the number of firms in the market.

Price and Quantity in Bertrand and Cournot Models