Bilateral oligopoly and quantity competition
Bilateral oligopoly is a strategic market game with two commodities, allowing strategic behavior on both sides of the market. When the number of buyers is large, such a game approximates a game of quantity competition played by sellers. We present examples which show that this is not typically a Cournot game. Rather, we introduce an alternative game of quantity competition (the market share game) and, appealing to results in the literature on contests, show that this yields the same equilibria as the many-buyer limit of bilateral oligopoly, under standard assumptions on costs and preferences. We also show that the market share and Cournot games have the same equilibria if and only if the price elasticity of the latter is one. These results lead to necessary and suÂ¢ cient conditions for the Cournot game to be a good approximation to bilateral oligopoly with many buyers and to an ordering of total output when they are not satisfied.
(This abstract was borrowed from another version of this item.)
|Date of creation:||2009|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (0)161 275 4868
Fax: (0)161 275 4812
Web page: http://www.socialsciences.manchester.ac.uk/subjects/economics/
More information through EDIRC
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.:
- Richard Cornes & Roger Hartley, 2005.
"Asymmetric contests with general technologies,"
Springer, vol. 26(4), pages 923-946, November.
- Novshek, William., 1984.
"On the Existence of Cournot Equilibrium,"
517, California Institute of Technology, Division of the Humanities and Social Sciences.
- Gabszewicz, J. & Michel, P., 1992.
"Oligopoly Equilibria in Exchange Economies,"
Papiers d'Economie MathÃ©matique et Applications
92.26, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- GABSZEWICZ, Jean & MICHEL, Philippe, 1992. "Oligopoly equilibria in exchange economies," CORE Discussion Papers 1992047, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Gabszewicz,Â J.J. & Michel, P., . "Oligopoly equilibrium in exchange economies," CORE Discussion Papers RP 1265, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Szidarovszky, Ferenc & Okuguchi, Koji, 1997. "On the Existence and Uniqueness of Pure Nash Equilibrium in Rent-Seeking Games," Games and Economic Behavior, Elsevier, vol. 18(1), pages 135-140, January.
- Alex Dickson & Roger Hartley, 2007.
"The strategic Marshallian cross,"
Keele Economics Research Papers
KERP 2007/13, Centre for Economic Research, Keele University.
- David M. Kreps & Jose A. Scheinkman, 1983. "Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 326-337, Autumn.
- Giraud, Gael, 2003. "Strategic market games: an introduction," Journal of Mathematical Economics, Elsevier, vol. 39(5-6), pages 355-375, July.
- Szidarovszky, F & Yakowitz, S, 1977. "A New Proof of the Existence and Uniqueness of the Cournot Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(3), pages 787-89, October.
- Codognato, Giulio, 1995. "Cournot-Walras and Cournot Equilibria in Mixed Markets: A Comparison," Economic Theory, Springer, vol. 5(2), pages 361-70, March.
- Stein, William E, 2002. " Asymmetric Rent-Seeking with More Than Two Contestants," Public Choice, Springer, vol. 113(3-4), pages 325-36, December.
- Busetto, Francesca & Codognato, Giulio & Ghosal, Sayantan, 2008. "Cournot-Walras Equilibrium as a Subgame Perfect Equilibrium," The Warwick Economics Research Paper Series (TWERPS) 837, University of Warwick, Department of Economics.
- R Cornes & R Hartley, 2005. "The Geometry of Aggregative Games," The School of Economics Discussion Paper Series 0514, Economics, The University of Manchester.
- Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, June.
- Shapley, Lloyd S & Shubik, Martin, 1977. "Trade Using One Commodity as a Means of Payment," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 937-68, October.
- Jaskold Gabszewicz, Jean & Vial, Jean-Philippe, 1972.
"Oligopoly "A la cournot" in a general equilibrium analysis,"
Journal of Economic Theory,
Elsevier, vol. 4(3), pages 381-400, June.
- JASKOLD GABSZEWICZ, Jean & VIAL, Jean-Philippe, . "Oligopoly "Ã la Cournot" in a general equilibrium analysis," CORE Discussion Papers RP 106, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
When requesting a correction, please mention this item's handle: RePEc:man:sespap:0911. 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: (Marianne Sensier)
If references are entirely missing, you can add them using this form.