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Cost Manipulation Games in Oligopoly, with Costs of Manipulating

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Author Info
Long, Ngo Van
Soubeyran, Antoine

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Abstract

We analyze a class of two-stage games where rival firms incur real resource costs in manipulating their marginal costs, so as to influence the outcome of the game they want to play in stage two. Marginal costs may be manipulated by various means, such as redistribution of productive assets, choice of location, or creation of an internal input market. A general formulation of the game is provided, and several applications are analyzed. We show that the optimal allocation of resources within an oligopoly can be asymmetric, even for ex-ante symmetric firms. This is an additional explanation of heterogeneity in oligopoly. Copyright 2001 by American Economic Association.

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Publisher Info
Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 42 (2001)
Issue (Month): 2 (May)
Pages: 505-33
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Handle: RePEc:ier:iecrev:v:42:y:2001:i:2:p:505-33

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hennessy, David A. & Lapan, Harvey E., 2006. "Symmetries of Imperfect Competition on a Circle," Staff General Research Papers 12551, Iowa State University, Department of Economics. [Downloadable!]
  2. Rabah Amir & Filomena Garcia & Malgorzata Knauff, 2006. "Endogenous Heterogeneity in Strategic Models: Symmetry-breaking via Strategic Substitutes and Nonconcavities," Working Papers 2006/29, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
  3. Ngo Van Long & Antoine Soubeyran, 2003. "Favoritism in Vertical Relationship: Input Prices and Access Quality," CIRANO Working Papers 2003s-14, CIRANO. [Downloadable!]
  4. Sami Dakhlia & Flavio M. Menezes & Akram Temimi, 2005. "The Role of R&D Technology in Asymmetric Research Joint Ventures," Microeconomics 0505003, EconWPA. [Downloadable!]
    Other versions:
  5. Antonio, TESORIERE, 2007. "Allocating cost reducing investments over competing divisions," Université catholique de Louvain, Département des Sciences Economiques Working Paper 2007021, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]
  6. Ngo Van Long & Antoine Soubeyran, 2001. "Emission Taxes and Standards for an Asymmetric Oligopoly," CIRANO Working Papers 2001s-07, CIRANO. [Downloadable!]
  7. Ngo Van Long & Antoine Soubeyran, 1999. "Input Price Discrimination, Access Pricing, and Bypass," CIRANO Working Papers 99s-23, CIRANO. [Downloadable!]
  8. Valletti, Tommaso, 2002. "Input Price Discrimination with Downstream Cournot Competitors," CEPR Discussion Papers 3570, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  9. Arye Hillman & Ngo Van Long & Antoine Soubeyran, 2000. "Protection, Lobbying, and Market Structure," CIRANO Working Papers 2000s-12, CIRANO. [Downloadable!]
    Other versions:
  10. Joan Canton, 2007. "Environmental Taxation and International Eco-Industries," Working Papers 2007.26, Fondazione Eni Enrico Mattei. [Downloadable!]
  11. Ngo Van Long & Antoine Soubeyran, 2003. "A Theory of Favoritism under International Oligopoly," CIRANO Working Papers 2003s-15, CIRANO. [Downloadable!]
  12. Sami Dakhlia & Flavio Marques Menezes & Akram Temimi, 2001. "Duplication of R D and Industry Concentration," Economics Working Papers (Ensaios Economicos da EPGE) 437, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]
  13. Ngo Van Long & Antoine Soubeyran, 1999. "Existence and Uniqueness of Cournot Equilibrium: A Contraction Mapping Approach," CIRANO Working Papers 99s-22, CIRANO. [Downloadable!]
    Other versions:
  14. Lapan, Harvey E. & Hennessy, David A., 2004. "Cost Arrangement and Welfare in a Multi-Product Cournot Oligopoly," Staff General Research Papers 12207, Iowa State University, Department of Economics. [Downloadable!]
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