The Road Less Travelled - Oligopoly and Competition Policy in General Equilibrium
AbstractI review previous approaches to modelling oligopoly in general equilibrium, and propose a new view which in principle overcomes their deficiencies: modelling firms as large in their own market but small in the economy as a whole. Implementing this approach requires a tractable specification of preferences. Dixit-Stiglitz preferences (which imply iso-elastic perceived demand functions) could be used, but "continuum-quadratic" preferences (which imply linear perceived demand functions) are more convenient. To illustrate their usefulness, I construct a simple closed-economy model of oligopoly in general equilibrium and derive some surprising implications for competition policy.
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Bibliographic InfoPaper provided by School Of Economics, University College Dublin in its series Working Papers with number 200222.
Length: 25 pages
Date of creation: 23 Sep 2002
Date of revision:
competition policy; Dixit-Stiglitz preferences; general equilibrium; GOLE (General Oligopolistic Equilibrium); oligopoly;
Find related papers by JEL classification:
- D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
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