Editing Duopoly (section)

====Bertrand paradox====
Under static price competition with homogenous products and constant, symmetric marginal cost, firms price at the level of marginal cost and make no [[Profit (economics)|economic profits]]. In contrast to the Cournot model, the Bertrand duopoly model assumes that firms compete on price rather than quantity. Each firm sets its price simultaneously, anticipating that the other firm will not change its price in response. When both firms use this logic, they will reach a Nash equilibrium, where neither firm has an incentive to change its price given the price set by the other firm. In this model, firms tend to price their products at the level of their marginal cost, resulting in zero economic profits, a phenomenon known as the [[Bertrand paradox (economics)|Bertrand paradox]].