Competition between two or more firms in an industry with product price as the strategic variable. This encourages the use of price-cutting as a form of competition. If the products produced by the firms are perfect substitutes, in the Nash equilibrium of the price-setting game, price equals marginal cost. The market equilibrium is then efficient even though the number of competing firms is limited. Bertrand duopoly is the special case of a market with two sellers engaged in price competition.
Reference: Oxford Press Dictonary of Economics, 5th edt.
Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >