Bertrand-nash Equilibrium in the Retail Duopoly Model under Asymmetric Costs

Abstract

In this paper, the Bertrand's price competition in the retail duopoly with asymmetric costs is analyzed. Retailers sell substitute products in the framework of the classical economic order quantity (EOQ) model with linear demand function. The market potential and competitor price are considered to be the bifurcation parameters of retailers. Levels of the barriers to market penetration depending on the bifurcation parameters are analyzed. The conditions of Bertrand-Nash equilibrium in parametric and trigonometric forms are found.