2008): “Bertrand-Edgeworth Equilibrium in Oligopoly,” MPRA working paper No

This paper investigates simultaneous move capacity constrained price competition game among three firms. I find that equilibria in an asymmetric oligopoly are substantially different from those in the duopoly and symmetric oligopoly. I characterize mixed strategy equi-libria and show there exist possibilities of i) the existence of a contin-uum of equilibria ii) the smallest firm earning the largest profit per ca-pacity and iii) non-identical supports of equilibrium mixed strategies, all of which never arise either in the duopoly or symmetric oligopoly. In particular, the second finding sheds light on a completely new pric-ing incentive in Bertrand competitions