On the Optimal Number of Firms in the Commons: Cournot vs Bertrand
We revisit the debate on the optimal number of firms in the commons in a differential oligopoly game in which firms are either quantity- or price-setting agents. Production exploits a natural resource and involves a negative externality. We calculate the number of firms maximising industry profits, finding that it is larger in the Cournot case. While industry structure is always inefficient under Bertrand behaviour, it may or may not be so under Cournot behaviour, depending on parameter values. The comparison of private industry optima reveals that the Cournot steady state welfare level exceeds the corresponding Bertrand magnitude if the weight of the stock of pollution is large enough.
|Date of creation:||Dec 2012|
|Date of revision:|
|Contact details of provider:|| Postal: Piazza Scaravilli, 2, and Strada Maggiore, 45, 40125 Bologna|
Phone: +39 051 209 8019 and 2600
Fax: +39 051 209 8040 and 2664
Web page: http://www.dse.unibo.it
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Charles F. Mason & Stephen Polasky, 1997. "The Optimal Number of Firms in the Commons: A Dynamic Approach," Canadian Journal of Economics, Canadian Economics Association, vol. 30(4), pages 1143-60, November.
- Hassan Benchekroun & Ngo Van Long, 1997.
"Efficiency Inducing Taxation for Polluting Oligopolists,"
CIRANO Working Papers
- Benchekroun, Hassan & van Long, Ngo, 1998. "Efficiency inducing taxation for polluting oligopolists," Journal of Public Economics, Elsevier, vol. 70(2), pages 325-342, November.
- Richard Cornes & Charles F. Mason & Todd Sandler, 1986. "The Commons and the Optimal Number of Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 101(3), pages 641-646.
- Sinn, Hans-Werner, 1984. "Common Property Resources, Storage Facilities and Ownership Structures: A Cournot Model of the Oil Market," Economica, London School of Economics and Political Science, vol. 51(23), pages 235-52, August.
- Fujiwara, Kenji, 2009. "Environmental policies in a differentiated oligopoly revisited," Resource and Energy Economics, Elsevier, vol. 31(3), pages 239-247, August.
- Benchekroun, Hassan & Van Long, Ngo, 2002. "On the multiplicity of efficiency-inducing tax rules," Economics Letters, Elsevier, vol. 76(3), pages 331-336, August.
- Katsoulacos, Yannis & Xepapadeas, Anastasios, 1995.
" Environmental Policy under Oligopoly with Endogenous Market Structure,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 97(3), pages 411-20, September.
- Katsoulacos, Yannis & Xepapadeas, Anastasios, 1994. "Environmental Policy Under Oligopoly with Endogenous Market Structure," CEPR Discussion Papers 955, C.E.P.R. Discussion Papers.
- William Novshek, 1980. "Cournot Equilibrium with Free Entry," Review of Economic Studies, Oxford University Press, vol. 47(3), pages 473-486.
- Morch von der Fehr, N-H., 1991.
"Tradable Emission Rights and Strategic Interaction,"
11/1991, Oslo University, Department of Economics.
- Nils-Henrik Mørch von der Fehr, 1993. "Tradable emission rights and strategic interaction," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 3(2), pages 129-151, April.
- Karp, Larry & Livernois, John, 1992. "On efficiency-inducing taxation for a non-renewable resource monopolist," Journal of Public Economics, Elsevier, vol. 49(2), pages 219-239, November.
- Cellini, Roberto & Lambertini, Luca & Ottaviano, Gianmarco I. P., 2004. "Welfare in a differentiated oligopoly with free entry: a cautionary note," Research in Economics, Elsevier, vol. 58(2), pages 125-133, June.
- Kjell Sunnevåg, 2003. "Auction Design for the Allocation of Emission Permits in the Presence of Market Power," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(3), pages 385-400, November.
- Dastidar, Krishnendu Ghosh, 1995. "On the Existence of Pure Strategy Bertrand Equilibrium," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 5(1), pages 19-32, January.
- Karp, Larry, 1992. "Social Welfare in a Common Property Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(2), pages 353-72, May.
- Cornes, Richard & Sandler, Todd, 1983. "On Commons and Tragedies," American Economic Review, American Economic Association, vol. 73(4), pages 787-92, September.
- Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329, December.
- Kotaro Suzumura & Kazuharu Kiyono, 1987. "Entry Barriers and Economic Welfare," Review of Economic Studies, Oxford University Press, vol. 54(1), pages 157-167.
When requesting a correction, please mention this item's handle: RePEc:bol:bodewp:wp856. 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: (Dipartimento Scienze Economiche, Universita' di Bologna)
If references are entirely missing, you can add them using this form.