IDEAS home Printed from https://ideas.repec.org/a/kap/jeczfn/v142y2024i3d10.1007_s00712-024-00859-w.html
   My bibliography  Save this article

Entry, market structures and welfare

Author

Listed:
  • Suryaprakash Mishra

    (National Law School of India University)

Abstract

Conventionally, entry is thought to enhance welfare by enhancing competition and hence lowering prices and increasing the output. Contrary to the conventional wisdom, working with an $$n$$ n -firm Cournot oligopoly set up and using the trigger strategies, we show that entry may or may not impact welfare. However, entry has the potential to alter the market structure from collusion to Cournot competition, and when it does so, there is a discontinuous rise in welfare.

Suggested Citation

  • Suryaprakash Mishra, 2024. "Entry, market structures and welfare," Journal of Economics, Springer, vol. 142(3), pages 267-276, August.
    • Handle: RePEc:kap:jeczfn:v:142:y:2024:i:3:d:10.1007_s00712-024-00859-w
    DOI: 10.1007/s00712-024-00859-w
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s00712-024-00859-w
    File Function: Abstract
    Download Restriction: no
    File URL: https://libkey.io/10.1007/s00712-024-00859-w?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Deneckere, R., 1983. "Duopoly supergames with product differentiation," Economics Letters, Elsevier, vol. 11(1-2), pages 37-42.
    2. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    3. Ross, Thomas W., 1992. "Cartel stability and product differentiation," International Journal of Industrial Organization, Elsevier, vol. 10(1), pages 1-13, March.
    4. Corchón, Luis C. & Torregrosa, Ramón J., 2020. "Cournot equilibrium revisited," Mathematical Social Sciences, Elsevier, vol. 106(C), pages 1-10.
    5. Wernerfelt, Birger, 1989. "Tacit collusion in differentiated cournot games," Economics Letters, Elsevier, vol. 29(4), pages 303-306.
    6. Kotaro Suzumura & Kazuharu Kiyono, 1987. "Entry Barriers and Economic Welfare," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(1), pages 157-167.
    7. Filomena Garcia & Jose Manuel Paz y Miño & Gustavo Torrens, 2020. "The merger paradox, collusion, and competition policy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(6), pages 2051-2081, December.
    8. Drew Fudenberg & Eric Maskin, 2008. "The Folk Theorem In Repeated Games With Discounting Or With Incomplete Information," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 11, pages 209-230, World Scientific Publishing Co. Pte. Ltd..
    9. Krishnendu Ghosh Dastidar & Sugata Marjit, 2022. "Market size, entry costs and free entry Cournot equilibrium," Journal of Economics, Springer, vol. 136(2), pages 97-114, July.
    10. Perry, Martin K, 1984. "Scale Economies, Imperfect Competition, and Public Policy," Journal of Industrial Economics, Wiley Blackwell, vol. 32(3), pages 313-333, March.
    11. Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, vol. 52(1), pages 101-121, January.
    12. Michael Spence, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 43(2), pages 217-235.
    13. Sugata Marjit & Suryaprakash Misra & Dyuti S Banerjee, 2017. "Technology improvement and market structure alteration," Economics Bulletin, AccessEcon, vol. 37(2), pages 1106-1112.
    14. David R. Collie, 2006. "Collusion in Differentiated Duopolies with Quadratic Costs," Bulletin of Economic Research, Wiley Blackwell, vol. 58(2), pages 151-159, April.
    15. Lahiri, Sajal & Ono, Yoshiyasu, 1988. "Helping Minor Firms Reduces Welfare," Economic Journal, Royal Economic Society, vol. 98(393), pages 1199-1202, December.
    16. Oz Shy, 1996. "Industrial Organization: Theory and Applications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691795, December.
    17. Martin, Stephen, 2001. "Industrial Organization: A European Perspective," OUP Catalogue, Oxford University Press, number 9780198297284, Decembrie.
    18. Harrington, Joseph Jr., 1989. "Collusion among asymmetric firms: The case of different discount factors," International Journal of Industrial Organization, Elsevier, vol. 7(2), pages 289-307, June.
    19. Chang, Myong-Hun, 1991. "The effects of product differentiation on collusive pricing," International Journal of Industrial Organization, Elsevier, vol. 9(3), pages 453-469, September.
    20. Duarte Brito & Margarida Catalão-Lopes, 2023. "Profit raising entry under mixed behavior," Journal of Economics, Springer, vol. 138(1), pages 51-72, January.
    21. N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sugata Marjit & Suryaprakash Misra & Dyuti S Banerjee, 2017. "Technology improvement and market structure alteration," Economics Bulletin, AccessEcon, vol. 37(2), pages 1106-1112.
    2. Kaplow, Louis & Shapiro, Carl, 2007. "Antitrust," Competition Policy Center, Working Paper Series qt9pt7p9bm, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
    3. Timothy Sorenson, 1999. "Product Location with Foresight," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 14(3), pages 281-292, May.
    4. Marjit, Sugata & Mukherjee, Arijit, 2013. "Foreign competition and social efficiency of entry," Economic Modelling, Elsevier, vol. 32(C), pages 108-112.
    5. Arijit Mukherjee & Udo Broll & Soma Mukherjee, 2009. "The welfare effects of entry: the role of the input market," Journal of Economics, Springer, vol. 98(3), pages 189-201, December.
    6. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, November.
    7. Sugata Marjit & Suryaprakash Mishra, 2020. "Quadratic Costs, Innovation and Welfare: The Role of Technology," CESifo Working Paper Series 8524, CESifo.
    8. Kaplow, Louis & Shapiro, Carl, 2007. "Antitrust," Handbook of Law and Economics, in: A. Mitchell Polinsky & Steven Shavell (ed.), Handbook of Law and Economics, edition 1, volume 2, chapter 15, pages 1073-1225, Elsevier.
    9. Arijit Mukherjee & Soma Mukherjee, 2008. "Excess‐Entry Theorem: The Implications Of Licensing," Manchester School, University of Manchester, vol. 76(6), pages 675-689, December.
    10. Colin von Negenborn, 2023. "The more the merrier? On the optimality of market size restrictions," Review of Economic Design, Springer;Society for Economic Design, vol. 27(3), pages 603-634, September.
    11. Baldelli, Serena & Lambertini, Luca, 2006. "Price vs quantity in a duopoly supergame with Nash punishments," Research in Economics, Elsevier, vol. 60(3), pages 121-130, September.
    12. Ming Chung Chang & Hsiao‐Ping Peng, 2009. "Structure Regulation, Price Structure, Cross‐Subsidization And Marginal Cost Of Public Funds," Manchester School, University of Manchester, vol. 77(6), pages 675-698, December.
    13. Michele Polo, 2018. "Entry games and free entry equilibria," Chapters, in: Luis C. Corchón & Marco A. Marini (ed.), Handbook of Game Theory and Industrial Organization, Volume I, chapter 11, pages 312-342, Edward Elgar Publishing.
    14. Leonardo Madio & Aldo Pignataro, 2022. "Collusion sustainability with a capacity constrained firm," "Marco Fanno" Working Papers 0295, Dipartimento di Scienze Economiche "Marco Fanno".
    15. Arijit Mukherjee, 2010. "External Economies of Scale and Insufficient Entry," Journal of Industry, Competition and Trade, Springer, vol. 10(3), pages 365-371, September.
    16. Luca Lambertini, 2000. "Technology and Cartel Stability under Vertical Differentiation," German Economic Review, Verein für Socialpolitik, vol. 1(4), pages 421-442, November.
    17. Marcel Canoy & Machiel van Dijk & Jan Lemmen & Ruud de Mooij & Jürgen Weigand, 2001. "Competition and stability in banking," CPB Document 15.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    18. Mattos, César & Coutinho, Paulo, 2004. "The Duopoly Policy in the Brazilian Model of Telecommunications Reform," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 58(3), July.
    19. Osterdal, Lars Peter, 2003. "A note on the stability of collusion in differentiated oligopolies," Research in Economics, Elsevier, vol. 57(1), pages 53-64, March.
    20. Cabral, Luis M. B., 2004. "Simultaneous entry and welfare," European Economic Review, Elsevier, vol. 48(5), pages 943-957, October.

    More about this item

    Keywords

    Entry; Market structures; Cournot competition; Collusion; Welfare;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jeczfn:v:142:y:2024:i:3:d:10.1007_s00712-024-00859-w. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.