On the competitive effects of divisionalization
AbstractIn this paper, we assume that firms can create independent divisions which compete in quantities in a homogeneous good market. Assuming identical firms and constant returns to scale, we prove that the strategic interaction of firms yields Perfect Competition if the number of firms is beyond some critical level. Assuming a fixed cost per firm and an upper bound on the maximum number of divisions, we show that when this upper bound tends to infinity and the fixed cost tends to zero, market equilibrium may yield either Perfect Competition or a Natural Oligopoly.
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Bibliographic InfoArticle provided by Elsevier in its journal Mathematical Social Sciences.
Volume (Year): 39 (2000)
Issue (Month): 1 (January)
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Web page: http://www.elsevier.com/locate/inca/505565
Other versions of this item:
- Corchón, Luis C. & González-Maestre, M., . "On the competitive effects of divisionalization," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/3813, Universidad Carlos III de Madrid.
- Luis Corchón & Miguel González-Maestre, 1994. "On the competitive effects of divisionalization," Working Papers. Serie AD 1994-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
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- Gonzalez-Maestre, Miguel, 2001. "Divisionalization with spatial differentiation," International Journal of Industrial Organization, Elsevier, vol. 19(8), pages 1297-1313, September.
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- Miguel González-Maestre, 1993. "Divisionalization In Markets With Hetergeneous Goods," Working Papers. Serie AD 1993-12, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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- Tsygankova, Marina, 2010. "When is a break-up of Gazprom good for Russia?," Energy Economics, Elsevier, vol. 32(4), pages 908-917, July.
- Marina Tsygankova, 2007. "When is Mighty Gazprom Good for Russia?," Discussion Papers 526, Research Department of Statistics Norway.
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