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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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    1. 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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    6. William Novshek, 1985. "On the Existence of Cournot Equilibrium," Review of Economic Studies, Oxford University Press, vol. 52(1), pages 85-98.
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    14. Koebel, Bertrand M. & Laisney, François, 2010. "The aggregate Le Chatelier Samuelson principle with Cournot competition," ZEW Discussion Papers 10-009, ZEW - Leibniz Centre for European Economic Research.
    15. 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.
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    24. Menezes-Filho, Naercio, 2005. "Is the Consumer Sector Competitive in the U.K.? A Test Using Household-Level Demand Elasticities and Firm-Level Price Equations," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 295-304, July.
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    1. 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.

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    More about this item

    Keywords

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

    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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