Cournot And Bertrand Competition In A Differentiated Oligopoly

Game theory is to study the mutual influence of the decision-making body and the equilibrium;that is, when a subject selection choice is influenced by the other main body, in turn it affects the other main body's decision-making.After several decades of developments, the game theory has made great achievements in various fields. The Cournot with output variable and the Bertrand model with price variable are known as classical models in game theory. We will discuss to choose output competition or price competition for the firms.In this paper, we analyze the strategic choices with oligopoly and with incomplete cost information, which are based on Cournot model and Bertrand model. Under product differentiation we choose output or price as a competitive variable, which makes the model more realistic in the market. We have following conclusions:1 There is a suppose that the demand structure is linear in oligopoly. When the products are substitutions, Bertrand competition is more efficient than Cournot competition. When the products are complements, Cournot competition is more efficient than Bertrand competition.2 If firms have common prior knowledges with incomplete cost information, a firm will choose the output more than short-term optimal yields, given another's level.That is, films will not maximize the profits, but continue to increase production and actively to obtain more informations in order to gain more profits.3 If firms have common prior knowledges with incomplete cost information, when the products are available substitutes, Bertrand competition is more efficient than Cournot competition; when the products are complements, Cournot competition is more efficient than Bertrand competition. That the presence of incomplete information is independent with the strategic choice of films.