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Natural oligopolies with exogenous sunk costs: A non-Suttonian result

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  • Laussel, Didier
  • Lahmandi-Ayed, Rim

Abstract

In a spatial competition model with exogenous fixed costs and divisible goods, we obtain non-Suttonian results. When the economy is infinitely replicated, the number of firms does go to infinity but, as consumers' income goes to infinity, the equilibrium number of firms tends toward a finite value. This occurs because the global demand to each firm becomes in the limit infinitely sensitive to price differentials since they give then rise to infinitely large differences in purchase expenditure.

Suggested Citation

  • Laussel, Didier & Lahmandi-Ayed, Rim, 2010. "Natural oligopolies with exogenous sunk costs: A non-Suttonian result," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 844-854, September.
  • Handle: RePEc:eee:mateco:v:46:y:2010:i:5:p:844-854
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    References listed on IDEAS

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