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Market Structure, Scale Economies, and Industry Performance Author info | Abstract | Publisher info | Download info | Related research | Statistics Rahab Amir
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We provide an extensive and general investigation of the effects on industry performance (profits and social welfare) of exogenously changing the number of firms in a Cournot framework. This amounts to an in-depth exploration of the well-known trade-off between competition and production efficiency. We establish that under scale economies, welfare is maximized by a finite number of firms. Our results shed light on several theoretical issues and policy debates in industrial organization, including the relationship between the Herfindahl index and social welfare, free versus socially optimal entry, concentration and profitability, destructive competition and natural monopoly. Our analytical approach combines simplicity with generality. ZUSAMMENFASSUNG - (Marktstruktur, Größenvorteile und Marktergebnis) In dem Beitrag wird im Rahmen eines Cournot-Ansatzes eine allgemeine Untersuchung der Auswirkungen der exogen sich ändernden Anzahl von Unternehmen auf das Marktergebnis (Gewinne und soziale Wohlfahrt) vorgestellt. Dabei wird in einer analytischen Betrachtung das bekannte Trade-off zwischen Wettbewerb und Produktionseffizienz herausgearbeitet. Es wird gezeigt, daß beim Vorliegen von Größenvorteilen die Wohlfahrt durch eine endliche Zahl von Firmen maximiert wird. Das Ergebnis beleuchtet verschiedene Aspekte der wirtschaftstheoretischen und industriepolitischen Diskussion, einschließlich der Beziehungen zwischen den Herfindahl-Index und der sozialen Wohlfahrt, freiem versus sozial optimalem Markteintritt, Konzentration und Profitabilität, ruinösem Wettbewerb und natürlichem Monopol. Der analytische Ansatz vereint Einfachheit mit Allgemeinheit.
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Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number
FS IV 00-08.
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Length: 40 pages
Date of creation: Aug 2000Date of revision:
Handle: RePEc:wzb:wzebiv:fsiv00-08Contact details of provider: Postal: Reichpietschufer 50, 10785 Berlin, Germany Phone: (++49)(30) 25491-441 Fax: (++49)(30) 25491-442 Web page: http://www.wzb.eu/mp/wiw/default.en.htm More information through EDIRC
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Keywords: Cournot oligopoly ; returns to scale ; entry ; equilibrium comparative statics ; Other versions of this item:
Paper Rabah Amir, 2000.
"Market Structure, Scale Economies and Industry Performance ,"
Discussion Papers
00-08, University of Copenhagen. Department of Economics.
[Downloadable!] Rabah Amir, .
"Market Structure, Scale Economies and Industry Performance ,"
CIE Discussion Papers
2000-03, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
[Downloadable!] AMIR, Rabah, 2003.
"Market structure, scale economies and industry performance ,"
CORE Discussion Papers
2003065, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
[Downloadable!] Find related papers by JEL classification: D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection D60 - Microeconomics - - Welfare Economics - - - 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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2007-014, Tilburg University, Tilburg Law and Economic Center.
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BELLEFLAMME, Paul & TOULEMONDE, Eric, 2007.
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