Bertrand model of oligopoly reveals that
A)capacity constraints are not important in determining market performance.
B)perfectly competitive prices can arise in markets with only a few firms.
C)changes in marginal cost do not affect prices.
D)all of the statements associated with this question are true.

Question

Quizplus · Accepted Answer

The Bertrand model of oligopoly suggests that in markets with only a few firms, perfectly competitive prices can arise. This is because each firm in the market will be aware that any price above the competitive price will result in a complete loss of market share, leading them to lower their prices to align with the competition. Therefore, the Bertrand model shows that oligopolistic markets can exhibit competitive behavior despite the presence of only a few firms.

Bertrand Model of Oligopoly Reveals That