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On Cournot's theory of oligopoly with perfect complements

Author

Listed:
  • Rabah Amir

    (University of Iowa)

  • Adriana Gama

    (El Colegio de Mexico)

Abstract

This paper provides a thorough characterization of the properties of Cournot’s complementary monopoly model (or oligopoly with perfect complements) in a general setting, including existence, uniqueness and the comparative statics effects of entry. As such, this serves to unify various results from the extant literature that have typically been derived with limited generality. In addition, several studies have suggested that Cournot’s complementary monopoly model is the dual problem to the standard Cournot oligopoly model. This result crucially relies on the assumption that the firms have no production costs. This paper shows that if the production costs of the firms are different from zero, the nice duality between these two oligopoly settings breaks down. One implication of this breakdown is that, in contrast to the Cournot model, oligopoly with perfect complements can be a game of strategic complements in a global sense even in the presence of production costs.

Suggested Citation

  • Rabah Amir & Adriana Gama, 2025. "On Cournot's theory of oligopoly with perfect complements," Serie documentos de trabajo del Centro de Estudios Económicos 2025-04, El Colegio de México, Centro de Estudios Económicos.
    • Handle: RePEc:emx:ceedoc:2025-04
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    File URL: https://cee.colmex.mx/dts/2025/DT-2025-4.pdf
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    More about this item

    Keywords

    oligopoly with perfect complements; price competition; horizontal integration; supermodularity;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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