The subgame-perfect equilibrium of a two-stage game in which firms first choose capacities and then engage in a Bertrand price setting game resembles the equilibrium in:

Question

Quizplus · Accepted Answer

In a two-stage game where firms first choose capacities and then set prices, the outcome resembles the Cournot model because firms commit to quantities (capacities) first, and then compete on prices, leading to a situation similar to quantity competition.

The Subgame-Perfect Equilibrium of a Two-Stage Game in Which Firms