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The Stable Coexistence of Oligopolies and the Competitive Fringe

Author

Listed:
  • V. Gonharenko

    (National Research University Higher School of Economics)

  • D. Pokrovsky

    (National Research University Higher School of Economics)

  • S. Shapoval

    (National Research University Higher School of Economics)

Abstract

In this paper, we introduce a simple new theory on mixed competition between oligopolistic firms and the competitive fringe, assuming a comparative advantage for big firms and free entry for small _rms. Oligopolies are defined as conglomerates, each part of which benefits from joint operations through lower costs. Our theory implies that (i) industries with a few oligopolies arise as a stable outcome of mixed competition; (ii) mixed competition differs from the monopolistic competition of single-product firms due to the underproduction of oligopolistic firms and differs from pure oligopolistic competition sine constraints on this underproduction are imposed by the competitive fringe; (iii) a positive shock in the market size an strengthen or weaken the competitiveness of the economy through the growth of the number of oligopolies

Suggested Citation

  • V. Gonharenko & D. Pokrovsky & S. Shapoval, 2018. "The Stable Coexistence of Oligopolies and the Competitive Fringe," HSE Working papers WP BRP 196/EC/2018, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:196/ec/2018
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    More about this item

    Keywords

    mixed market structure; monopolistic competition; oligopolistic firms; general equilibrium; market size;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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