This paper assumes that firms can create independent divisions which compete in a market where the product is spatially differentiated. Our first result is that if the number of firms is exogenous and higher than some critical level, then Perfect Competition is the only Subgarne Perfect EquiLibrium. On the other hand, if we assume free entry and a fixed cost per firm, depending on the relationship between fixed costs and the degree of product differentiation, the equilibrium outcome may be monopoly, oligopoly or monopol istic competition. Moreover, if the fixed cost is sufficientty small, the number of independent sellers will be Lower than in the standard modelwhere divisionaliization is not possible.
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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number
1993-12.
Length: 30 pages Date of creation: Dec 1993 Date of revision: Publication status: Published by Ivie Handle: RePEc:ivi:wpasad:1993-12
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References listed on IDEAS 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.:
Luis Corchón & Bhaskar Chakravorti & Simon Wilkie, 1993.
"Credible Implementation,"
Working Papers. Serie AD
1993-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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Chakravorti, B. & Corchon, L.C., 1992.
"Credible Implementation,"
Papers
76, Bell Communications - Economic Research Group.