A Bertrand equilibrium is an example of a Nash equilibrium.

Question

Quizplus · Accepted Answer

A Bertrand equilibrium occurs when firms in a market set prices equal to their marginal costs, resulting in a Nash equilibrium where no firm can gain an advantage by unilaterally changing its price. Therefore, a Bertrand equilibrium is an example of a Nash equilibrium. In a Bertrand equilibrium, each firm sets its price equal to its marginal cost, assuming that the other firm will do the same. This results in a Nash equilibrium, where neither firm can increase its profit by unilaterally deviating from its strategy. Therefore, a Bertrand equilibrium is also an example of a Nash equilibrium.

A Bertrand Equilibrium Is an Example of a Nash Equilibrium