The Korean Economic Review
The Comparison of Entry Deterrence Between Cournot And Bertrand Competition
Jin Young Lee / Gyu Ho Wang Year 2007Vol. 23No. 1
We compare the incentive of an incumbent monopolist to deter the entrybetween Cournot and Bertrand competition in differentiated productmarkets. It is first shown that unless the products are perfect substitutes, theincumbent can block the entry more easily under Cournot competition thanunder Bertrand competition. For the entry deterrence, as long as theproducts are differentiated to some degree, like the blockaded entry, theincumbent would like to deter the entry more under Cournot competitionthan under Bertrand competition. However, if the product differentiation isquite small, the incumbent can deter the entry more easily under Bertrandcompetition than in the Cournot competition.