In the Bertrand model
A)Each firm takes the quantities produced by its rivals as given
B)Each firm takes the prices charged by its rivals as given
C)One firm plays a leadership role and its rivals merely follow
D)Prices are higher and quantities are slightly less than we would see if the firms colluded to achieve the monopoly outcome

Question

Quizplus · Accepted Answer

In the Bertrand model, each firm takes the prices charged by its rivals as given. The firms compete by setting prices, rather than quantities, which differentiates the Bertrand model from the Cournot model. The outcome of the Bertrand model is generally competitive, with prices equal to marginal cost and quantities produced equal to the market demand.

In the Bertrand Model