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Unequal Treatment of Identical Agents in Cournot Equilibrium

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Author Info
Stephen W. Salant
Greg Shaffer

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Abstract

Oligopoly models where prior actions by firms affect subsequent marginal costs have been useful in illuminating policy debates in areas such as antitrust regulation, environmental protection, and international competition. The authors discuss properties of such models when a Cournot equilibrium occurs at the second stage. Aggregate production costs strictly decline with no change in gross revenue or gross consumer surplus if the prior actions strictly increase the variance of marginal costs without changing the marginal-cost sum. Therefore, unless the cost of inducing second-stage asymmetry more than offsets this reduction in production costs, the private and social optima are asymmetric.

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Publisher Info
Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 89 (1999)
Issue (Month): 3 (June)
Pages: 585-604
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Handle: RePEc:aea:aecrev:v:89:y:1999:i:3:p:585-604

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  3. Kamien, Morton I & Muller, Eitan & Zang, Israel, 1992. "Research Joint Ventures and R&D Cartels," American Economic Review, American Economic Association, vol. 82(5), pages 1293-306, December. [Downloadable!] (restricted)
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  5. Dansby, Robert E & Willig, Robert D, 1979. "Industry Performance Gradient Indexes," American Economic Review, American Economic Association, vol. 69(3), pages 249-60, June. [Downloadable!] (restricted)
  6. Ted Bergstrom & Hal Varian, 1985. "Two Remarks on Cournot Equilibria," University of California at Santa Barbara, Economics Working Paper Series 1985C, Department of Economics, UC Santa Barbara. [Downloadable!]
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  7. Suzumura, Kotaro, 1992. "Cooperative and Noncooperative R&D in an Oligopoly with Spillovers," American Economic Review, American Economic Association, vol. 82(5), pages 1307-20, December. [Downloadable!] (restricted)
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  10. A. M. Spence, 1981. "The Learning Curve and Competition," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 49-70, Spring. [Downloadable!] (restricted)
  11. Dasgupta, Partha & Stiglitz, Joseph E, 1988. "Learning-by-Doing, Market Structure and Industrial and Trade Policies," Oxford Economic Papers, Oxford University Press, vol. 40(2), pages 246-68, June. [Downloadable!] (restricted)
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  12. Drew Fudenberg & Jean Tirole, 1983. "Learning-by-Doing and Market Performance," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 522-530, Autumn. [Downloadable!] (restricted)
  13. Agliardi, Elettra, 1990. "Learning-by-doing and the emergence of monopoly : A note," Economics Letters, Elsevier, vol. 32(4), pages 353-357, April. [Downloadable!] (restricted)
  14. Leahy, Dermot & Neary, J Peter, 1997. "Public Policy towards R&D in Oligopolistic Industries," American Economic Review, American Economic Association, vol. 87(4), pages 642-62, September. [Downloadable!] (restricted)
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  15. James A. Brander & Barbara J. Spencer, 1983. "Strategic Commitment with R&D: The Symmetric Case," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 225-235, Spring. [Downloadable!] (restricted)
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  16. Salant, S.W. & Shaffer, G., 1992. "Optimal Asymmetric Strategies in Research Joint Ventures: A Comment on the Literature," Papers 93-06, Michigan - Center for Research on Economic & Social Theory.
  17. Gaudet, Gerard & Salant, Stephen W, 1991. "Uniqueness of Cournot Equilibrium: New Results from Old Methods," Review of Economic Studies, Blackwell Publishing, vol. 58(2), pages 399-404, April. [Downloadable!] (restricted)
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  18. Besley, Timothy & Suzumura, Kotaro, 1992. "Taxation and Welfare in an Oligopoly with Strategic Commitment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(2), pages 413-31, May. [Downloadable!] (restricted)
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  19. Collie, David, 1993. "Strategic trade policy under asymmetric oligopoly," European Journal of Political Economy, Elsevier, vol. 9(2), pages 275-280, May. [Downloadable!] (restricted)
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