Friday, December 28, 2012

Inferior Factor in Cournot Oligopoly Revisited

Posted by D. Daniel Sokol

Paolo Bertoletti (Department of Economics and Management, University of Pavia) and Pierre Von Mouche (Economics of Consumers and Households, Wageningen University) discuss Inferior Factor in Cournot Oligopoly Revisited.

ABSTRACT: We reconsider the recent work by [Oku10] on (possibly asymmetric) Cournotian firms with two production factors, one of them being inferior. It is shown there that an increase in the price of the inferior factor does raise equilibrium industry output. In addition of providing a simpler and more rigorous proof of such a result, we generalize it to the case of technologies with s = 2 factors and allow some firms not to use the inferior one.

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