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Comparative Statics for Oligopoly: Demand Shift Effects

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  • Quirmbach, Herman C

Abstract

When demand rises in an imperfectly competitive industry, price, output, profits, consumer surplus, and welfare may individually rise or fall. The possibilities are thus broader than with either a demand shift under competition or a cost shift in either typ e of industry. Systematic relationships are established showing, howe ver, that the pattern of effects cannot be arbitrary. Imperfect compe tition is necessary for profits to fall when demand rises-profits alw ays rise with either perfect competition or perfect collusion. This a gain contrasts with the cost shift case, where imperfect competition is not necessary for perverse profit effects. Copyright 1988 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Quirmbach, Herman C, 1988. "Comparative Statics for Oligopoly: Demand Shift Effects," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(3), pages 451-459, August.
  • Handle: RePEc:ier:iecrev:v:29:y:1988:i:3:p:451-59
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    Cited by:

    1. Grimm Veronika & Zöttl Gregor, 2010. "Price Regulation under Demand Uncertainty," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-34, June.
    2. Chen, Kevin Z. & Weerahewa, Jeevika, 1998. "Regulation, Market Power, And Advertising Effectiveness," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 27(2), October.
    3. Simon GB Cowan & Simon Cowan, 2004. "Demand shifts and imperfect competition," Economics Series Working Papers 188, University of Oxford, Department of Economics.
    4. Boone, Jan & Müller, Wieland, 2012. "The distribution of harm in price-fixing cases," International Journal of Industrial Organization, Elsevier, vol. 30(2), pages 265-276.
    5. David, Maia & Nimubona, Alain-Désiré & Sinclair-Desgagné, Bernard, 2011. "Emission taxes and the market for abatement goods and services," Resource and Energy Economics, Elsevier, vol. 33(1), pages 179-191, January.
    6. Corchon, Luis C. & Fradera, Isabel, 2002. "Comparative statics in Cournot free entry equilibrium," Mathematical Social Sciences, Elsevier, vol. 44(2), pages 155-168, November.
    7. Arghya Ghosh & Alberto Motta, 2011. "Outsourcing with Heterogeneous Firms," Discussion Papers 2011-09, School of Economics, The University of New South Wales.
    8. Weerahewa, Jeevika, 2003. "Estimating Market Power of Tea Processing Sector," Sri Lankan Journal of Agricultural Economics, Sri Lanka Agricultural Economics Association (SAEA), vol. 5.
    9. Mario Tello, 1992. "Precios relativos, producción interna y exportaciones en modelos de competencia imperfecta doméstica y mercados segmentados," Documentos de Trabajo / Working Papers 1992-107, Departamento de Economía - Pontificia Universidad Católica del Perú.
    10. Hamilton, Stephen F., 1999. "Demand shifts and market structure in free-entry oligopoly equilibria," International Journal of Industrial Organization, Elsevier, vol. 17(2), pages 259-275, February.
    11. Marco Terrones & Luis Catão, 2000. "Determinants of Dollarization; The Banking Side," IMF Working Papers 00/146, International Monetary Fund.

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