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The "Average" Within-Sector Firm Heterogeneity in General Oligopolistic Equilibrium

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  • Colacicco, Rudy

Abstract

This paper builds a general oligopolistic equilibrium model to investigate how within-sector firm heterogeneities affect wage rate, country-wide profits, and welfare. Using linear inverse demands, I consider asymmetric sectors, each involving n Cournot oligopolists producing horizontally differentiated varieties with constant, though asymmetric, costs. I link a measure of the average within-sector firm heterogeneity with the economy-wide, endogenously determined, and competitive wage rate. For interior equilibriums, the higher the "average" the lower the wage rate. Once general equilibrium feedbacks from wage rate are considered, the "average" has an unclear impact on country-wide profits and welfare, depending on moments of the technology distribution as well as demand parameters. The findings have implications to better understand antitrust and related policies.

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  • Colacicco, Rudy, 2012. "The "Average" Within-Sector Firm Heterogeneity in General Oligopolistic Equilibrium," MPRA Paper 40212, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:40212
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    Cited by:

    1. Rudy Colacicco, 2015. "Ten Years Of General Oligopolistic Equilibrium: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(5), pages 965-992, December.
    2. Akihiko Yanase & Keita Kamei, 2022. "Dynamic Game of International Pollution Control with General Oligopolistic Equilibrium: Neary Meets Dockner and Long," Dynamic Games and Applications, Springer, vol. 12(3), pages 751-783, September.

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    More about this item

    Keywords

    Cournot Competition; General Oligopolistic Equilibrium (GOLE); Asymmetric Oligopoly; Horizontal Differentiation; Market Concentration; Antitrust;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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