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Endogenous duopolies

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  • Gayer, Amit

Abstract

This paper investigates an oligopolistic market with vertical product differentiation, where both qualities and consumers are represented by unidimensional intervals. We examine the Nash equilibrium with positive profits per each firm in the oligopoly game with different production costs. We show that under standard conditions on consumers’ preferences an endogenous duopoly will arise.

Suggested Citation

  • Gayer, Amit, 2017. "Endogenous duopolies," Economics Letters, Elsevier, vol. 159(C), pages 1-3.
    • Handle: RePEc:eee:ecolet:v:159:y:2017:i:c:p:1-3
    DOI: 10.1016/j.econlet.2017.06.043
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    References listed on IDEAS

    as
    1. Champsaur, Paul & Rochet, Jean-Charles, 1989. "Multiproduct Duopolists," Econometrica, Econometric Society, vol. 57(3), pages 533-557, May.
    2. Gayer Amit, 2007. "Oligopoly, Endogenous Monopolist and Product Quality," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 7(1), pages 1-21, August.
    3. Jaskold Gabszewicz, Jean & Shaked, Avner & Sutton, John & Thisse, Jacques-Francois, 1986. "Segmenting the market: The monopolist's optimal product mix," Journal of Economic Theory, Elsevier, vol. 39(2), pages 273-289, August.
    4. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(1), pages 3-13.
    5. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    6. Shaked, Avner & Sutton, John, 1983. "Natural Oligopolies," Econometrica, Econometric Society, vol. 51(5), pages 1469-1483, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Oligopoly; Endogenous duopoly; Different production costs; Positive profits;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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