Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Friday, October 20, 2017

Welfare-Reducing Entry in a Differentiated Cournot Oligopoly Without Costs

Shohei Yoshida, Osaka University - Institute of Social and Economic Research (ISER) examines Welfare-Reducing Entry in a Differentiated Cournot Oligopoly Without Costs.

ABSTRACT: We revisit the relationships between competition and various market outcomes in a differentiated Cournot oligopoly. Consider an oligopolistic market with two differentiated varieties, where each firm sells one of the varieties. We show that social welfare and consumer surplus can decrease with the number of firms when the products of entrants and incumbents are homogeneous. Moreover, an entry of firm can increases prices and profits of firm producing the other variety. We provide a simple exposition of the conditions which determine the effect of an increase in the number of entrants on various market outcomes.

http://lawprofessors.typepad.com/antitrustprof_blog/2017/10/welfare-reducing-entry-in-a-differentiated-cournot-oligopoly-without-costs.html

| Permalink

Comments

Post a comment