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Free Entry in a Cournot Market with Imperfectly Substituting Goods

Author

Listed:
  • Lin Liu

    () (University of Southern California)

  • X. Henry Wang

    () (University of Missouri-Columbia)

Abstract

Two results are shown about the free-entry equilibrium in a Cournot market with asymmetric firms and imperfectly substituting goods. First, only one technology will survive in the production of each good. Second, some good(s) may not be produced. Specifically, we show that in a two-good model only one good is produced if the substitution parameter is higher than a critical value and both goods are produced for smaller substitution parameter values.

Suggested Citation

  • Lin Liu & X. Henry Wang, 2010. "Free Entry in a Cournot Market with Imperfectly Substituting Goods," Economics Bulletin, AccessEcon, vol. 30(3), pages 1935-1941.
  • Handle: RePEc:ebl:ecbull:eb-10-00341
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    File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I3-P176.pdf
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    More about this item

    Keywords

    Free-entry equilibrium; Cournot competition; substituting goods;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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