Oligopolistic Equilibrium and Financial Constraints
AbstractIn this paper we present a model of oligopoly and financial constraints. We study allocations which are bankruptcy-free (BF) in the sense that no firm can drive another firm to bankruptcy without becoming bankrupt. We show how such allocations can be sustained as an equilibrium of a dynamic game. When there are two firms, all equilibria yield BF allocations. When there are more than two firms, allocations other than BF can be sustained as equilibria but in some cases the set of BF allocations still useful in explaining the shape of equilibrium set.
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Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 547.
Date of creation: Apr 2011
Date of revision:
Financial Constraints; Bankruptcy; Firm Behavior; Dynamic Games;
Other versions of this item:
- Carmen Beviá & Luis C. Corchón & Yosuke Yasuda, 2011. "Oligopolistic equilibrium and financial constraints," Economics Working Papers we1110, Universidad Carlos III, Departamento de Economía.
- D2 - Microeconomics - - Production and Organizations
- D4 - Microeconomics - - Market Structure and Pricing
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
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- Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, December.
- Billette de Villemeur, Etienne & Flochel, Laurent & Versaevel, Bruno, 2012.
"Optimal collusion with limited liability,"
38481, University Library of Munich, Germany.
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