Bertrand competition

The Bertrand model of competition assumes simultaneous price setting between firms. This results in a zero economic profit equilibrium, where price equals marginal cost. The pure Bertrand competition model obviously cannot apply to an industry with fixed costs, as a price equals marginal cost rule would, in the long run, lead to closure of the entire industry. The pure Bertrand model would appear to be inapplicable to all the industries under examination here, as they all have significant fixed costs. A modified price-setting model, such as under monopolistic competition, however, could be employed. 

Kreps, D., Sheinkman, I, 1983. Quantity precommitment and Bertrand competition yield Cournot outcomes. Bell Journal of Economics 14, 326-337. 

The use of the Cournot model instead of other competition representations (Bertrand, Stackelberg, limit price, etc.) is not only justified by the support of the literature or its tractability, but also by the fact that it is compatible with the following quotations from cement manufacturers and analysts (Oxera, 2004) ... 

Moreover, under Bertrand price competition, the market price will equal to marginal cost and the intermediary will earn zero profit. Thus, she must offer a bid-ask spread no more than... 

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