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Forward trading and adjustment costs in Cournot markets

  • Margaret E. Slade
  • Henry Thille

[eng] Many commodity markets satisfy the assumptions that underlie the Cournot model. These markets, however, have a feature that is not considered in that model - producers and consumers can enter into contracts for forward transactions. We consider the implications of forward trading for Cournot markets. In particular, we take the simple two-period game that is common in the literature and extend it to include various sorts of adjustment costs. The adjustment costs that we consider are of two sorts : They can involve time or periods during which players are committed to their decisions, or they can involve dollars or expenditure of resources when those decisions are changed. Whereas the former are procompetitive or output enhancing, we show that, in general, the latter are anticompetitive or output restricting. [fre] De nombreux marchés satisfont les hypothèses qui sont à la base du modèle de Cournot. Ces marchés ont cependant un trait qui n'est pas pris en compte dans ce modèle : les producteurs et les consommateurs peuvent contracter à terme. Nous considérons les implications des contrats à terme dans des marchés à la Cournot. En particulier, nous retenons un jeu à deux périodes assez commun dans la littérature et nous retendons afin d'intégrer différentes sortes de coûts d'ajustement. Les coûts d'ajustement que nous analysons sont de deux sortes. Ils peuvent impliquer des périodes de temps au cours desquelles les joueurs sont tenus par leurs décisions. Ou ils peuvent impliquer des dépenses de ressources en dollars quand ces décisions sont modifiées. Alors que les premiers sont concurrentiels, c'est-à-dire incitent à produire plus, les seconds sont anti-concurrentiels, c'est-à-dire incitent à produire moins.

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Article provided by Programme National Persée in its journal Cahiers d'économie politique.

Volume (Year): 37 (2000)
Issue (Month): 1 ()
Pages: 177-195

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Handle: RePEc:prs:caecpo:cep_0154-8344_2000_num_37_1_1294
Note: DOI:10.3406/cep.2000.1294
Contact details of provider: Web page: http://www.persee.fr/web/revues/home/prescript/revue/cep

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  1. Fershtman, Chaim & Kamien, Morton I, 1990. "Turnpike Properties in a Finite-Horizon Differential Game: Dynamic Duopoly with Sticky Prices," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(1), pages 49-60, February.
  2. Hughes, John S. & Kao, Jennifer L., 1997. "Strategic forward contracting and observability," International Journal of Industrial Organization, Elsevier, vol. 16(1), pages 121-133, November.
  3. Lapham, Beverly & Ware, Roger, 1994. "Markov puppy dogs and related animals," International Journal of Industrial Organization, Elsevier, vol. 12(4), pages 569-593, December.
  4. Vila, Jean-Luc, 1989. "Simple games of market manipulation," Economics Letters, Elsevier, vol. 29(1), pages 21-26.
  5. Allaz, Blaise, 1992. "Oligopoly, uncertainty and strategic forward transactions," International Journal of Industrial Organization, Elsevier, vol. 10(2), pages 297-308, June.
  6. Phlips, Louis, 1992. "Oligopolistic Pricing of Crude Oil Futures," The Economic Record, The Economic Society of Australia, vol. 0(0), pages 75-104, Supplemen.
  7. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
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