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Nonparallel demand increases in an asymmetric Cournot oligopoly

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  • Yuqing Zheng
  • Harry Kaiser

Abstract

We examine equilibrium responses of a Cournot oligopoly to two typical types of nonparallel demand increases. The results based on a linear demand curve show that in terms of profits, increases in demand that result in a more elastic demand curve are beneficial to every firm, with large firms benefiting disproportionately. In sharp contrast, only certain small firms benefit from demand increases that result in a more inelastic demand. Our results have implications in marketing and government policy making.

Suggested Citation

  • Yuqing Zheng & Harry Kaiser, 2010. "Nonparallel demand increases in an asymmetric Cournot oligopoly," Applied Economics Letters, Taylor & Francis Journals, vol. 17(9), pages 829-833.
    • Handle: RePEc:taf:apeclt:v:17:y:2010:i:9:p:829-833
    DOI: 10.1080/13504850802552317
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    References listed on IDEAS

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    1. Justin P. Johnson & David P. Myatt, 2006. "On the Simple Economics of Advertising, Marketing, and Product Design," American Economic Review, American Economic Association, vol. 96(3), pages 756-784, June.
    2. Quirmbach, Herman C, 1988. "Comparative Statics for Oligopoly: Demand Shift Effects," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(3), pages 451-459, August.
    3. Hamilton, Stephen F., 1999. "Demand shifts and market structure in free-entry oligopoly equilibria," International Journal of Industrial Organization, Elsevier, vol. 17(2), pages 259-275, February.
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