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3. The Bertrand model of price competition suggests that, under a given set of conditions, firms make zero economic profits even if there are only
3. The Bertrand model of price competition suggests that, under a given set of conditions, firms make zero economic profits even if there are only two firms. However, there are many instances of industries with a small number of competitors where firms appear to earn more than zero economic profits. Give an example of an industry dominated by a couple of firms where profits are sig- nificant. Explain why the predictions of the Bertrand model are not borne out
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