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Tight oligopolies: in search of proportionate remedies

Author

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  • Marcel Canoy

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • S. Onderstal

Abstract

Tight oligopolies are oligopolies the market characteristics of which facilitate the realisation of supranormal profits for a substantial period of time. We entangle the link between market structure and the possibility of welfare reducing behaviour by firms. A useful distinction can be made between ‘unilateral effects' (oligopolistic firms realise supra-normal profits without co-ordinating their strategies) and ‘co-ordinated effects' (oligopolistic firms realise supra-normal profits by co-ordinating their strategies). The study develops a ‘diagnostic approach', a tool that helps policy makers find proportionate remedies to tight oligopolies: (1) ‘prevent' a market from becoming a tight oligopoliy; (2) ‘cure' a currently tight oligopoly by changing the market structure; and (3) treat the symptoms of an established tight oligopoly. We apply this diagnostic approach to six cases of (potentially) tight oligopolies.

Suggested Citation

  • Marcel Canoy & S. Onderstal, 2003. "Tight oligopolies: in search of proportionate remedies," CPB Document 29, CPB Netherlands Bureau for Economic Policy Analysis.
  • Handle: RePEc:cpb:docmnt:29
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    References listed on IDEAS

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    Cited by:

    1. Rob Aalbers & Victoria Shestalova & Sander Onderstal, 2004. "Better safe than sorry? Reliability policy in network industries," CPB Document 73, CPB Netherlands Bureau for Economic Policy Analysis.
    2. L. Bettendorf & S. A. van der Geest & G. H. Kuper, 2009. "Do daily retail gasoline prices adjust asymmetrically?," Journal of Applied Statistics, Taylor & Francis Journals, vol. 36(4), pages 385-397.
    3. Marcel Canoy & Patrick Rey & Eric van Damme, 2004. "Dominance and Monopolization," Chapters,in: The International Handbook of Competition, chapter 7 Edward Elgar Publishing.
    4. Machiel Mulder & Victoria Shestalova & Mark Lijesen, 2005. "Vertical separation of the energy-distribution industry; an assessment of several options for unbundling," CPB Document 84, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Jorn van STEENIS, 2015. "Regulatory Policy Implications of Different Levels of Symmetry," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(98), pages 43-60, 2nd quart.

    More about this item

    JEL classification:

    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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