Modeling innovation and regulation thanks to game theory: Bertrand competition

One uses the model which has been already presented in articles by author: competition through prices (Bertrand competition), demands being deduced from consumers ‘utilities. can highlight three phenomena: “Monopolistic competition”: The products sold are enough differentiated, each firm having its “garden”, customers it keeps provided price is not higher than others’ prices. criterium “buy and close down” profitable: when to buy down profitable, incentive merge stronger. It a sign of saturated market. “non-differentiating innovation”: it. Each utility (u1, u2, u3) becomes (u1 + K, u2 u3 K), K > 0. demonstrates, thanks tractable examples, that non-differentiating innovation trigger profitable”. less differentiated at start (“monopolistic competition” profitable). incites firms choose disruption.