Because firms selling a homogeneous product set price in response to the (perceived)pricing decision of other firms in the Bertrand Model of oligopoly in equilibrium price exceeds marginal cost.

Question

Quizplus · Accepted Answer

Because firms set price and sell a homogenous product other firms will always set price lower if a firm prices above marginal cost.In equilibrium all firms charge P = MC (same as the competitive equilibrium).

Because Firms Selling a Homogeneous Product Set Price in Response