Differentiated Bertrand Model

Analytics

A commonly used framework for analyzing competition is the differentiated Bertrand model. This model operates under the premise that firms provide products that are similar but not identical, competing mainly on price. Specifically, we assume that the firms aim to maximize their profits by selecting prices. The foundational concept of competition among these firms is grounded in game theory; however, an in-depth exploration of game theory is outside the purview of this document. Instead, we will illustrate how this model can be utilized to assess a merger.