On the counter-cyclicality of prices and markups in a Cournot model of entry
We prove in a Cournot model that the price and markup are counter-cyclical due to changes in the extent of competition if the income effect is decreasing in the price, as occurs when preferences are homothetic or demand is isoelastic.
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- Bresnahan, Timothy F, 1987. "Competition and Collusion in the American Automobile Industry: The 1955 Price War," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 457-482, June.
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