Resource title

Price-dependent profit sharing as an escape from the Bertrand paradox

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Resource description

In this paper we show how an upstream firm can prevent destructive competition among downstream firms producing relatively close substitutes by implementing a price-dependent profit-sharing rule. The rule also ensures that the downstream firms undertake investments which benefit the industry in aggregate. The model is consistent with observations from the market for content commodities distributed by mobile networks.

Resource author

Øystein Foros, Kåre P. Hagen, Hans Jarle Kind

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/25972

Resource license

Adapt according to the presented license agreement and reference the original author.