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Conjectural cost variations in a differentiated good oligopoly

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  • Jurgan, Jens
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    Abstract

    In the homogenous good case, the relationship between market structure and efficiency was studied extensively. Assuming a standard quadratic utility with quantity competition, this paper carries on the analysis in a differentiated good context. It can be shown that there is a positive relationship between market heterogeneity and efficiency, too. In contrast to the homogenous good case, consumer surplus as well as producer surplus increases with the dispersion of marginal costs. --

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    Bibliographic Info

    Paper provided by University of Würzburg, Chair for Monetary Policy and International Economics in its series W.E.P. - Würzburg Economic Papers with number 80.

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    Date of creation: 2009
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    Handle: RePEc:zbw:wuewep:80

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    Related research

    Keywords: Differentiated goods; Cournot; Asymmetric costs; Cost variation; Welfare;

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    1. Amir, Rabah & Jin, Jim Y., 2001. "Cournot and Bertrand equilibria compared: substitutability, complementarity and concavity," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 19(3-4), pages 303-317, March.
    2. X. Henry Wang & Judy Hsu, 2005. "On Welfare under Cournot and Bertrand Competition in Differentiated Oligopolies," Working Papers, Department of Economics, University of Missouri 0514, Department of Economics, University of Missouri.
    3. Piercarlo Zanchettin, 2006. "Differentiated Duopoly with Asymmetric Costs," Journal of Economics & Management Strategy, Wiley Blackwell, Wiley Blackwell, vol. 15(4), pages 999-1015, December.
    4. Joseph Farrell and Carl Shapiro., 1988. "Horizontal Mergers: An Equilibrium Analysis," Economics Working Papers, University of California at Berkeley 8880, University of California at Berkeley.
    5. Häckner, Jonas, 1999. "A Note on Price and Quantity Competition in Differentiated Oligopolies," Research Papers in Economics, Stockholm University, Department of Economics 1999:9, Stockholm University, Department of Economics.
    6. Zhao, Jingang, 2001. "A characterization for the negative welfare effects of cost reduction in Cournot oligopoly," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 19(3-4), pages 455-469, March.
    7. Bester, Helmut & Petrakis, Emmanuel, 1993. "The incentives for cost reduction in a differentiated industry," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 11(4), pages 519-534.
    8. Wang, X. Henry & Zhao, Jingang, 2007. "Welfare reductions from small cost reductions in differentiated oligopoly," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 25(1), pages 173-185, February.
    9. Berg, L. & Bergstrom, R., 1993. "Consumption, Income, Wealth and Household Debt - n Econometric Analysis of the Swedish Experience 1970- 1992," Papers, Uppsala - Working Paper Series 1993-12, Uppsala - Working Paper Series.
    10. Kimmel, Sheldon, 1992. "Effects of Cost Changes on Oligopolists' Profits," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 40(4), pages 441-49, December.
    11. Long, Ngo Van & Soubeyran, Antoine, 2001. "Cost Manipulation Games in Oligopoly, with Costs of Manipulating," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(2), pages 505-33, May.
    12. Donald Smythe & Jingang Zhao, 2006. "The Complete Welfare Effects of Cost Reductions in a Cournot Oligopoly," Journal of Economics, Springer, Springer, vol. 87(2), pages 181-193, 03.
    13. Lahiri, Sajal & Ono, Yoshiyasu, 1988. "Helping Minor Firms Reduces Welfare," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 98(393), pages 1199-1202, December.
    14. Symeonidis, George, 2003. "Quality heterogeneity and welfare," Economics Letters, Elsevier, Elsevier, vol. 78(1), pages 1-7, January.
    15. Fevrier, Philippe & Linnemer, Laurent, 2004. "Idiosyncratic shocks in an asymmetric Cournot oligopoly," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 22(6), pages 835-848, June.
    16. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
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