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Aggregation with Cournot Competition: An Empirical Investigation

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  • Bertrand Koebel
  • François Laisney

Abstract

This paper empirically investigates the existence of Cournot equilibrium and the validity of the Le Chatelier-Samuelson (LCS) principle in the aggregate. Whereas two well known existence conditions are statistically rejected, we cannot reject a third, original, condition. We also find some empirical evidence for the LCS principle, as well as both increasing and constant returns to scale for two-digit US manufacturing industries. The results highlight the importance of imperfect competition for understanding aggregate growth, investment and employment.

Suggested Citation

  • Bertrand Koebel & François Laisney, 2016. "Aggregation with Cournot Competition: An Empirical Investigation," Annals of Economics and Statistics, GENES, issue 121-122, pages 91-119.
    • Handle: RePEc:adr:anecst:y:2016:i:121-122:p:91-119
    DOI: 10.15609/annaeconstat2009.121-122.91
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    References listed on IDEAS

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    1. Heiner, Ronald A, 1982. "Theory of the Firm in "Short-Run" Industry Equilibrium," American Economic Review, American Economic Association, vol. 72(3), pages 555-562, June.
    2. Sabien Dobbelaere & Jacques Mairesse, 2013. "Panel data estimates of the production function and product and labor market imperfections," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 1-46, January.
    3. Amir, Rabah, 2005. "Ordinal versus cardinal complementarity: The case of Cournot oligopoly," Games and Economic Behavior, Elsevier, vol. 53(1), pages 1-14, October.
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    5. Koebel, Bertrand M. & Laisney, François, 2010. "The aggregate Le Chatelier Samuelson principle with Cournot competition," ZEW Discussion Papers 10-009, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Kulatilaka, Nalin, 1987. "The Specification of Partial Static Equilibrium Models," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 327-335, May.
    7. Braulke, Michael, 1984. "The Firm in Short-run Industry Equilibrium: Comment," American Economic Review, American Economic Association, vol. 74(4), pages 750-753, September.
    8. Bartelsman, Eric J., 1995. "Of empty boxes: Returns to scale revisited," Economics Letters, Elsevier, vol. 49(1), pages 59-67, July.
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    10. Bertrand Koebel & François Laisney, 2014. "Aggregation with Cournot Competition: the Le Chatelier Samuelson Principle," Annals of Economics and Statistics, GENES, issue 115-116, pages 343-360.
    11. Roeger, Werner, 1995. "Can Imperfect Competition Explain the Difference between Primal and Dual Productivity Measures? Estimates for U.S. Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 316-330, April.
    12. Bertrand M. Koebel, 2002. "Can Aggregation Across Goods be Achieved by Neglecting The Problem? Property Inheritance and Aggregation Bias," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 223-255, February.
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    19. repec:adr:anecst:y:2014:i:115-116 is not listed on IDEAS
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    More about this item

    Keywords

    Aggregation; Le Chatelier-Samuelson Principle; Returns to Scale; Market Power; Markup; Own-Price Elasticity.;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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