competitive equilibrium

Why Has This Bertrand Model Been Criticized?

by

Why Has This Bertrand Model Been Criticized? A popular criticism of the duopoly models developed by Bertrand [1883] and Edgeworth [1897] is that their predictions are inconsistent with observed duopoly behavior. Why is Bertrand model criticized? It assumes firms do not learn from their mistakes. The initial assumption is that the other firm will keep

Is The Competitive Equilibrium Efficient?

by

Is The Competitive Equilibrium Efficient? In an exchange economy, a competitive equilibrium is Pareto efficient. … In a competitive equilibrium price is equal to short run marginal cost, so no firm can sell an extra unit at a price that covers its short run marginal cost. Is equilibrium always efficient? Equilibrium quantity is when supply