Breaking the Bertrand Paradox

• Product differentiation - Sellers doesn't lose all of their customers when their prices are higher
• Capacity constraints - A firm has market power over the residual demand if a rival cannot supply the whole market
• Incomplete information about prices and search costs- Lower prices cannot attract consumers who are not aware of them
• Repeated interaction - Firms may not complete as intensely as the Bertrand model predicts , if they interact repeatedly
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  The duopolies set a lower price than the monopoly level and Cournot level