Which one of the following statements is a common criticism of the original Bertrand duopoly model?
A) Firms never choose optimal prices as strategic variables.
B) Firms would more naturally choose quantities if goods are homogenous.
C) The assumption that market share is split evenly between the firms is unrealistic.
D) A and B are correct.
E) B and C are correct.

Question

Quizplus · Accepted Answer

The original Bertrand duopoly model assumes that firms compete by setting prices, rather than quantities, which is not always realistic. It also assumes that market share is split evenly between the two firms, which is not a realistic assumption in many industries. Therefore, options B and C are correct criticisms of the model. Option A is not a common criticism of the model.

Which One of the Following Statements Is a Common Criticism