Writing Resources
With each competitor that enters the market there is less space available in the marketplace When competing supply is present each competitor needs to sell half of the remaining market Myatt 2017 Specifically the room remaining room left for me for a supplier is Opponent Qmax Myatt 2017 p 6 Performance as a percentage of the gross market value Smax shows that the more competitors the less profit between competitors however consumer surplus increases assuming fixed costs are equal The Bertrand model structure would see competitors due to being homogenous focus on similar price setting with the outcome being that they will share half of the demand It is also noted that that the product is likely to be homogenous Besanko Braeutigam 2011 553 If the competitors have a bigger focus on price this would drive the price down to marginal cost By each competitor maximising its own profit and not responding to competitor output the industry profit may not be maximised In comparison in a Cournot equilibrium as the number of competitors increase the elasticity of demand increases and price falls However Besanko Braeutigam 2011 notes that the competitor price is reached only a to specific limit before profits contract and consumer surplus has reached its peak
