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Aggregative games and oligopoly theory: short‐run and long‐run analysis

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  • Simon P. Anderson
  • Nisvan Erkal
  • Daniel Piccinin

Abstract

We compile an IO toolkit for aggregative games with positive and normative comparative statics results for asymmetric oligopoly in the short and long run. We characterize the class of aggregative Bertrand and Cournot oligopoly games, and the subset for which the aggregate is a summary statistic for consumer welfare. We close the model with a monopolistically competitive fringe for long‐run analysis. Remarkably, we show strong neutrality properties in the long run across a wide range of market structures. The results elucidate aggregative games as a unifying principle in the literature on merger analysis, privatization, Stackelberg leadership, and cost shocks.

Suggested Citation

  • Simon P. Anderson & Nisvan Erkal & Daniel Piccinin, 2020. "Aggregative games and oligopoly theory: short‐run and long‐run analysis," RAND Journal of Economics, RAND Corporation, vol. 51(2), pages 470-495, June.
    • Handle: RePEc:bla:randje:v:51:y:2020:i:2:p:470-495
    DOI: 10.1111/1756-2171.12322
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    Cited by:

    1. Etro, Federico, 2023. "Platform competition with free entry of sellers," International Journal of Industrial Organization, Elsevier, vol. 89(C).
    2. Alfaro, Martin & Lander, David, 2021. "Restricting entry without aggressive pricing," Research in Economics, Elsevier, vol. 75(4), pages 305-319.
    3. Simon P. Anderson & Martin Peitz, 2023. "Ad Clutter, Time Use, and Media Diversity," American Economic Journal: Microeconomics, American Economic Association, vol. 15(2), pages 227-270, May.
    4. Holger Breinich & Harald Fadinger & Volker Nocke & Nicolas Schutz, 2020. "Gravity With Granularity," CRC TR 224 Discussion Paper Series crctr224_2020_236, University of Bonn and University of Mannheim, Germany.
    5. Sergey G. Kokovin & Shamil Sharapudinov & Alexander Tarasov & Philip Ushchev, 2020. "A Theory of Monopolistic Competition with Horizontally Heterogeneous Consumers," CESifo Working Paper Series 8082, CESifo.
    6. Kojun Hamada & Takao Ohkawa & Makoto Okamura, 2022. "Optimal taxation in a free‐entry Cournot oligopoly: The average cost function approach," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(2), pages 1166-1192, May.
    7. Timo Autio & Jorge Padilla & Salvatore Piccolo & Pekka Sääskilahti & Lotta Väänänen, 2020. "On the Risk of Using a Firm-Level Approach to Identify Relevant Markets," CSEF Working Papers 581, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    8. Federico Etro, 2023. "Hybrid Marketplaces with Free Entry of Sellers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(2), pages 119-148, March.
    9. Nisvan Erkal & Lijun Pan, 2022. "Horizontal Merger Analysis with Endogenous Product Range Choice," ISER Discussion Paper 1162, Institute of Social and Economic Research, Osaka University.
    10. Bruno Jullien & Alessandro Pavan & Marc Rysman, 2021. "Two-sided markets, pricing, and network effects," Post-Print hal-03828345, HAL.
    11. Motta, Massimo & Tarantino, Emanuele, 2021. "The effect of horizontal mergers, when firms compete in prices and investments," International Journal of Industrial Organization, Elsevier, vol. 78(C).
    12. Takanori ADACHI & Michal Fabinger, 2021. "Pass-Through and the Welfare Effects of Taxation under Imperfect Competition: A General Analysis," Discussion papers e-21-003, Graduate School of Economics , Kyoto University.
    13. Sato, Susumu, 2021. "Market shares and profits in two-sided markets," Economics Letters, Elsevier, vol. 207(C).
    14. Pan, Lijun & Wang, Yongjin, 2020. "Competition among large and heterogeneous small firms," Economics Letters, Elsevier, vol. 196(C).
    15. Martin Alfaro, 2020. "On Strategic Investments by Leader Firms under Endogenous Entry and Quantity Competition," Economics Bulletin, AccessEcon, vol. 40(4), pages 3231-3240.
    16. Volker Nocke & Nicolas Schutz, 2023. "Merger Analysis with IIA Demand and Type Aggregation," CRC TR 224 Discussion Paper Series crctr224_2023_459, University of Bonn and University of Mannheim, Germany.
    17. Luis C. Corchón, 2021. "Aggregative games," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 12(1), pages 49-71, March.

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