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Price-quantity competition with varying toughness

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  • d’ASPREMONT, Claude
  • DOS SANTOS FERREIRA, Rodolphe

Abstract

In order to formalize the variety of oligopolistic competition regimes, we adopt an approach (pioneered by Shubik, 1959) where firms behave strategically both in price and quantity. The corresponding concept of oligopolistic equilibriumallo ws for a parameterized continuum of regimes with varying competitive toughness. In particular, the Cournot and the competitive outcomes coincide, respectively, with the softest and the toughest oligopolistic equilibrium outcome. The set of all equilibrium outcomes are compared with those obtained in three alternative approaches, respectively based on pricing-schemes, conjecturalvariations and supply functions. Finally, we explore the possibility of endogenizing strategically the choice of competitive toughness by the firms.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2004088.

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Date of creation: 00 Dec 2004
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Handle: RePEc:cor:louvco:2004088

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  1. Grossman, Sanford J, 1981. "Nash Equilibrium and the Industrial Organization of Markets with Large Fixed Costs," Econometrica, Econometric Society, vol. 49(5), pages 1149-72, September.
  2. Cyert, Richard M & DeGroot, Morris H, 1973. "An Analysis of Cooperation and Learning in a Duopoly Context," American Economic Review, American Economic Association, vol. 63(1), pages 24-37, March.
  3. d’ASPREMONT, Claude & DOS SANTOS FERREIRA, Rodolphe & GERARD-VARET, Louis-André, . "Strategic R&D investment, competitive toughness and growth," CORE Discussion Papers RP -2240, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Claude d'Aspremont & Rodolphe Dos Santos Ferreira & Louis-André Gérard-Varet, 2007. "Competition For Market Share Or For Market Size: Oligopolistic Equilibria With Varying Competitive Toughness," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(3), pages 761-784, 08.
  5. Delgado, Juan & Moreno, Diego, 2004. "Coalition-proof supply function equilibria in oligopoly," Journal of Economic Theory, Elsevier, vol. 114(2), pages 231-254, February.
  6. Jan Boone, 2000. "Competitive Pressure: The Effects on Investments in Product and Process Innovation," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 549-569, Autumn.
  7. Boone, Jan, 2001. "Intensity of competition and the incentive to innovate," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 705-726, April.
  8. d'ASPREMONT, Claude & DOS SANTOS FERREIRA, Rodolphe & GERARD-VARET, Louis-André, . "Pricing schemes and Cournotian equilibria," CORE Discussion Papers RP -943, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Dixit, Avinash K, 1986. "Comparative Statics for Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 107-22, February.
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Cited by:
  1. d’ASPREMONT, Claude & DOS SANTOS FERREIRA, Rodolphe, 2009. "Household behavior and individual autonomy," CORE Discussion Papers 2009022, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Claude d’Aspremont & Rodolphe Dos Santos Ferreira & Jacques Thépot, 2007. "Hawks and doves in segmented markets : A formal approach to competitive aggressiveness," Working Papers of LaRGE Research Center 2007-04, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg (France).
  3. Farm, Ante, 2013. "Price Formation in Consumer Markets," Working Paper Series 1/2013, Swedish Institute for Social Research.
  4. D’ASPREMONT, Claude & DOS SANTOS FERREIRA, Rodolphe, 2005. "Oligopolistic competition as a common agency game," CORE Discussion Papers 2005018, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Cherchye, Laurens & Demuynck, Thomas & De Rock, Bram, 2013. "The empirical content of Cournot competition," Journal of Economic Theory, Elsevier, vol. 148(4), pages 1552-1581.
  6. D’ASPREMONT, Claude & DOS SANTOS FERREIRA, Rodolphe, 2012. "Household behavior and individual autonomy: An extended Lindahl mechanism," CORE Discussion Papers 2012014, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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