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The road less travelled : oligopoly and competition policy in general equilibrium

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  • J. Peter Neary

Abstract

I review previous approaches to modelling oligopoly in general equilibrium, and propose a new view which in principle overcomes their deficiencies: modelling firms as large in their own market but small in the economy as a whole. Implementing this approach requires a tractable specification of preferences. Dixit-Stiglitz preferences (which imply iso-elastic perceived demand functions) could be used, but "continuum-quadratic" preferences (which imply linear perceived demand functions) are more convenient. To illustrate their usefulness, I construct a simple closed-economy model of oligopoly in general equilibrium and derive some surprising implications for competition policy.

Suggested Citation

  • J. Peter Neary, 2002. "The road less travelled : oligopoly and competition policy in general equilibrium," Working Papers 200222, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:200222
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    File URL: http://hdl.handle.net/10197/1259
    File Function: First version, 2002
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    Citations

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    Cited by:

    1. Azar, José, 2017. "Portfolio Diversification, Market Power, and the Theory of the Firm," IESE Research Papers D/1170, IESE Business School.
    2. J. Peter Neary, 2002. "Globalisation and market structure," Working Papers 200220, School of Economics, University College Dublin.
    3. Alireza Naghavi & Dermot Leahy, 2006. "Intellectual Property Rights and Entry into a Foreign Market: FDI vs. Joint Ventures," Working Papers 2006.97, Fondazione Eni Enrico Mattei.
    4. Alireza Naghavi & Dermot Leahy, 2008. "Intellectual Property Rights and North-South Joint Ventures," Center for Economic Research (RECent) 017, University of Modena and Reggio E., Dept. of Economics "Marco Biagi".
    5. Kamei, Keita, 2014. "Pro-competitive effect, division of labor, and firm productivity," Economics Letters, Elsevier, vol. 124(1), pages 132-135.
    6. Dirk Willenbockel, 2005. "The Price Normalisation Problem in General Equilibriun Models with Oligopoly Power: An Attempt at Perspective," GE, Growth, Math methods 0505002, University Library of Munich, Germany.
    7. Leopoldo Yanes, 2008. "R&D, Market Structure and Trade: A General Equilibrium Analysis," Discussion Papers Series 361, School of Economics, University of Queensland, Australia.
    8. J. Peter Neary & Joe Tharakan, 2005. "Endogenous mode of competition in general equilibrium," Working Papers 200526, School of Economics, University College Dublin.
    9. Cosimo Beverelli & Kornel Mahlstein, 2011. "Outsourcing and Competition Policy," Journal of Industry, Competition and Trade, Springer, vol. 11(2), pages 131-147, June.
    10. Kamei, Keita, 2013. "Trade Liberalization, Division of Labor, and Firm Productivity," MPRA Paper 50301, University Library of Munich, Germany.

    More about this item

    Keywords

    Competition policy; Dixit-Stiglitz preferences; General equilibrium; GOLE (General Oligopolistic Equilibrium); Oligopoly; Competition--Government policy; Equilibrium (Economics); Oligopolies--Econometric models; Antitrust law;
    All these keywords.

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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