Bertrand competition and Cournot outcomes: further results

The model of Kreps and Scheinkman where firms choose capacities and then co mpete in price is extended to oligopoly. Further, capacity is an imperfect commitment device: firms can produce beyond capacities at an additional uni t cost theta. When theta is larger than the Cournot price, the Cournot outc ome obtains in the unique subgame perfect equilibrium. When theta decreases from the Cournot price towards zero, the whole range of prices, from Courn ot to Bertrand, is obtained in equilibrium. (C) 2000 Elsevier Science S.A. All rights reserved. JEL classification: D43; F13; L13.