On Welfare under Cournot and Bertrand Competition in Differentiated Oligopolies
AbstractHäckner (2000, Journal of Economic Theory 93, 233–239) shows that in a differentiated oligopoly with more than two firms, prices may be higher under Bertrand competition than under Cournot competition, implying that the classical result of Singh and Vives (1984, Rand Journal of Economics, 15, 546–554) that Bertrand prices are always lower than Cournot prices is sensitive to the duopoly assumption. Häckner (2000, Journal of Economic Theory, 93, 233–239), however, leaves unanswered the important question of whether welfare may be lower under price competition. This note shows that in Häckner’s model both consumer surplus and total surplus are higher under price competition than under quantity competition, regardless of whether goods are substitutes or complements. Copyright Springer 2005
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Springer in its journal Review of Industrial Organization.
Volume (Year): 27 (2005)
Issue (Month): 2 (09)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100336
Bertrand; Cournot; differentiated oligopoly; welfare;
Other versions of this item:
- X. Henry Wang & Judy Hsu, 2005. "On Welfare under Cournot and Bertrand Competition in Differentiated Oligopolies," Working Papers 0514, Department of Economics, University of Missouri.
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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.:
- Hackner, Jonas, 2000.
"A Note on Price and Quantity Competition in Differentiated Oligopolies,"
Journal of Economic Theory,
Elsevier, vol. 93(2), pages 233-239, August.
- Häckner, Jonas, 1999. "A Note on Price and Quantity Competition in Differentiated Oligopolies," Research Papers in Economics 1999:9, Stockholm University, Department of Economics.
- Dixit, Avinash K., 1978.
"A Model of Duopoly Suggesting a Theory of Entry Barriers,"
The Warwick Economics Research Paper Series (TWERPS)
125, University of Warwick, Department of Economics.
- Avinash Dixit, 1979. "A Model of Duopoly Suggesting a Theory of Entry Barriers," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 20-32, Spring.
- Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
- Jurgan, Jens, 2009. "Conjectural cost variations in a differentiated good oligopoly," W.E.P. - WÃ¼rzburg Economic Papers 80, University of Würzburg, Chair for Monetary Policy and International Economics.
- Ming Chang, 2010. "An Asymmetric Oligopolist can Improve Welfare by Raising Price," Review of Industrial Organization, Springer, vol. 36(1), pages 75-96, February.
- Luis C. Corchon & Galina Zudenkova, 2008.
"Computing welfare losses from data under imperfect competition with heterogeneous goods,"
Economics Working Papers
we082616, Universidad Carlos III, Departamento de Economía.
- Corchón, Luis C. & Zudenkova, Galina, 2009. "Computing welfare losses from data under imperfect competition with heterogeneous goods," International Journal of Industrial Organization, Elsevier, vol. 27(6), pages 646-654, November.
- Wang, X. Henry & Zhao, Jingang, 2007. "Welfare reductions from small cost reductions in differentiated oligopoly," International Journal of Industrial Organization, Elsevier, vol. 25(1), pages 173-185, February.
- Sebastian von Engelhardt, 2010. "Quality Competition or Quality Cooperation? License-Type and the Strategic Nature of Open Source vs. Closed Source Business Models," Jena Economic Research Papers 2010-034, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.