What is Bertrand's competition?
Bertrand Competition is a marketing model in which two or more pages determine prices for the same or similar items or services at the same time; A decision to convince that competitors will not make prices. It is based on the assumption that the subjects concerned do not play or end together. Using information about the prices for each entity in the mathematical equation, it is assumed that it is possible to map the most competitive price. The term was named for French mathematician Joseph Bertrand, who developed a mathematical equation to prove this phenomenon.
There are four basic symbols that are used in the competing equation Bertrand: MC at marginal costs, P1 for the price level of One, P2 for the price level TWO and PM for the monopoly price level. These symbols allow you to express information about prices as a mathematical equation. The information can also be mapped on the graph with these symbols.
in Abertrand's competition equations can help evaluate the market share and potential losingYou and predict overall changes in prices. The overall goal that has shown this model is to gain a larger market share and at the same time remain profitable. This means that entities can reduce prices to earn more customers, but must maintain prices above marginal costs to avoid loss.
The Bertrand model only believes that the entities will compete on the basis of the price. It does not take into account elements of prices that can be appreciated by a subject such as customer loyalty, longevity and influence. Competition Bertrand also effectively measures what other elements, in addition to the price, would motivate a potential customer, such as comfort.
This model tends to be a more effective measure of Duopol, because it means that both entities are to capture cap and serve the whole market. If multiple entities are involved, it is less likely that any organization can handle the dominance of the market. For this reason, the success of the model dependsstrongly on the abilities of the entities involved.
The Bertrand model is often used as an exercise in marketing curriculum. Its mathematical equations can be calculated manually or using a software that can help increase the understanding of the data chart for each entity. There are websites that perform this feature.