The Sustainability Concept under Alternative Behavioral Assumptions
The main results of the sustainability literature on natural monopolies (for example, Panzar and Willig (1977)), are shown to depend on the Bertrand conjecture. First, for the natural monopoly case we prove that industry configurations that are sustainable in the sense of Willig (1980) are equivalent to special kinds of Bertrand equilibria. Second, we show that sustainability under the Bertrand assumption does not necessarily imply sustainability under the Cournot assumption and vice versa. The general efficiency results that have been obtained for sustainable configurations no longer hold under the Cournot assumption. On the other hand, von Stackelberg behavior guarantees sustainability and an efficient industry structure, though not necessarily efficient pricing. Third, under the Bertrand assumption, entry can be deterred if sunk costs comprise a sufficiently large fraction of total costs, but this result fails to hold under the Cournot assumption.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 13 (1982)
Issue (Month): 1 (Spring)
|Contact details of provider:|| Web page: http://www.rje.org|
|Order Information:||Web: https://editorialexpress.com/cgi-bin/rje_online.cgi|
When requesting a correction, please mention this item's handle: RePEc:rje:bellje:v:13:y:1982:i:spring:p:234-241. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.