Consumers Lose as Bertrand Competition Fails to Outperform Cournot in Certain Markets
The article compares two types of competition, Bertrand and Cournot, in markets where companies don't know their rivals' production costs. Usually, Bertrand competition, where firms set prices, is seen as better for consumers no matter the products. However, the study found that when companies have similar low costs and don't know each other's costs, Cournot competition, where firms set quantities, can lead to lower prices. This shows that in certain situations with incomplete information, Cournot competition might be more efficient than Bertrand competition in some firms' markets.