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Natural Oligopolies : A Vertical Differentiation Model

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  • Lahmandi-Ayed, R

Abstract

In a vertical differentiation model, we investigate whether the property of finiteness holds when the average cost function depends on the quantity. We prove that this property holds when the cost function has increasing returns. In the case of cost functions with decreasing returns, we prove that the finiteness property does not hold if the average cost tends to zero when the quantity tends to zero.

Suggested Citation

  • Lahmandi-Ayed, R, 1996. "Natural Oligopolies : A Vertical Differentiation Model," Papiers d'Economie Mathématique et Applications 96.05, Université Panthéon-Sorbonne (Paris 1).
    • Handle: RePEc:fth:pariem:96.05
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    Cited by:

    1. Auer, Raphael A. & Sauré, Philip, 2017. "Dynamic entry in vertically differentiated markets," Journal of Economic Theory, Elsevier, vol. 167(C), pages 177-205.
    2. Choi, Yoonho & Kwan Choi, E., 2018. "Quality competition in north-south trade," International Journal of Production Economics, Elsevier, vol. 201(C), pages 216-224.
    3. Amacher, Gregory S. & Koskela, Erkki & Ollikainen, Markku, 2004. "Environmental quality competition and eco-labeling," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 284-306, March.
    4. Adel Ben Youssef & Rim Lahmandi-Ayed, 2008. "Eco-labelling, Competition and Environment: Endogenization of Labelling Criteria," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 41(2), pages 133-154, October.
    5. Jean-Marc Bonnisseau & Hend Ghazzai, 2005. "Monopole, stratégies multiproduit et incitation à la recherche et développement," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00193974, HAL.
    6. Jean‐Marc Bonnisseau & Rim Lahmandi‐Ayed, 2007. "Vertical differentiation with non‐uniform consumers' distribution," International Journal of Economic Theory, The International Society for Economic Theory, vol. 3(3), pages 179-190, September.
    7. WAUTHY, Xavier Y., 2014. "From Bertrand to Cournot via Kreps and Scheinkman: a hazardous journey," LIDAM Discussion Papers CORE 2014026, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. Janko Hernández Cortés & Paolo Morganti, 2022. "Existence and uniqueness of price equilibria in location-based models of differentiation with full coverage," Journal of Economics, Springer, vol. 136(2), pages 115-148, July.
    9. Rim Lahmandi-Ayed, 2007. "Finiteness property with vertical and horizontal differentiation: does it really matter?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 33(3), pages 531-548, December.
    10. Raphael Auer & Philip Sauré, 2011. "Spatial Competition in Quality, Demand Induced Innovation, and Schumpeterian Growth," DEGIT Conference Papers c016_067, DEGIT, Dynamics, Economic Growth, and International Trade.
    11. Chen, Yijuan & Hu, Xiangting & Li, Sanxi, 2017. "Quality differentiation and firms’ choices between online and physical markets," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 96-132.

    More about this item

    Keywords

    OLIGOPOLIES ; VERTICAL INTEGRATION;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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