IDEAS home Printed from https://ideas.repec.org/p/wrk/warwec/1292.html
   My bibliography  Save this paper

Surplus Bounds in Cournot Monopoly and Competition

Author

Listed:
  • Condorelli, Daniele

    (University of Warwick)

  • Szentes, Balazs

    (London School of Economics)

Abstract

We characterize equilibria of oligopolistic markets where identical firms with constant marginal cost compete a’ la Cournot. For given maximal willingness to pay and maximal total demand, we first identify all combinations of quilibrium consumer and producer surplus that can arise from arbitrary demand functions. Then, as a further restriction, we fix the average willingness to pay above marginal cost (i.e., first best surplus) and identify all possible triples of consumer surplus, producer surplus and deadweight loss.

Suggested Citation

  • Condorelli, Daniele & Szentes, Balazs, 2020. "Surplus Bounds in Cournot Monopoly and Competition," The Warwick Economics Research Paper Series (TWERPS) 1292, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:1292
    as

    Download full text from publisher

    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2020/twerp_1292_-_condorelli.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Andrés Carvajal & Rahul Deb & James Fenske & John K.‐H. Quah, 2013. "Revealed Preference Tests of the Cournot Model," Econometrica, Econometric Society, vol. 81(6), pages 2351-2379, November.
    2. Andrew Atkeson & Ariel Burstein, 2008. "Pricing-to-Market, Trade Costs, and International Relative Prices," American Economic Review, American Economic Association, vol. 98(5), pages 1998-2031, December.
    3. Farrell, Joseph & Shapiro, Carl, 1990. "Horizontal Mergers: An Equilibrium Analysis," American Economic Review, American Economic Association, vol. 80(1), pages 107-126, March.
    4. Oliver Hart, 1982. "A Model of Imperfect Competition with Keynesian Features," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(1), pages 109-138.
    5. Anderson, Simon P. & Renault, Regis, 2003. "Efficiency and surplus bounds in Cournot competition," Journal of Economic Theory, Elsevier, vol. 113(2), pages 253-264, December.
    6. Neeman, Zvika, 2003. "The effectiveness of English auctions," Games and Economic Behavior, Elsevier, vol. 43(2), pages 214-238, May.
    7. Kremer, Michael, 2018. "Worst-Case Bounds on R&D and Pricing Distortions: Theory and Disturbing Conclusions if Consumer Values Follow the World Income," CEPR Discussion Papers 13241, C.E.P.R. Discussion Papers.
    8. Tsitsiklis, John N. & Xu, Yunjian, 2014. "Efficiency loss in a Cournot oligopoly with convex market demand," Journal of Mathematical Economics, Elsevier, vol. 53(C), pages 46-58.
    9. Condorelli, Daniele & Szentes, Balázs, 2020. "Information design in the holdup problem," LSE Research Online Documents on Economics 90620, London School of Economics and Political Science, LSE Library.
    10. Berry, Steven T, 1992. "Estimation of a Model of Entry in the Airline Industry," Econometrica, Econometric Society, vol. 60(4), pages 889-917, July.
    11. Vives, Xavier, 1989. "Cournot and the oligopoly problem," European Economic Review, Elsevier, vol. 33(2-3), pages 503-514, March.
    12. Michael Kremer & Christopher M. Snyder, 2018. "Worst-Case Bounds on R&D and Pricing Distortions: Theory with an Application Assuming Consumer Values Follow the World Income Distribution," NBER Working Papers 25119, National Bureau of Economic Research, Inc.
    13. Daniele Condorelli & Balázs Szentes, 2020. "Information Design in the Holdup Problem," Journal of Political Economy, University of Chicago Press, vol. 128(2), pages 681-709.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Condorelli, Daniele & Szentes, Balazs, 2020. "Surplus Bounds in Cournot Monopoly and Competition," CRETA Online Discussion Paper Series 62, Centre for Research in Economic Theory and its Applications CRETA.
    2. Condorelli, Daniele, 2022. "A lower-bound on monopoly profit for log-concave demand," Economics Letters, Elsevier, vol. 210(C).
    3. Yang, Kai Hao, 2021. "Efficient demands in a multi-product monopoly," Journal of Economic Theory, Elsevier, vol. 197(C).
    4. Gui, Qingyun & Huang, Yi C., 2022. "On Condorelli inequality for log-concave demand," Economics Letters, Elsevier, vol. 215(C).
    5. Steven Bond‐Smith, 2022. "Discretely innovating: The effect of limited market contestability on innovation and growth," Scottish Journal of Political Economy, Scottish Economic Society, vol. 69(3), pages 301-327, July.
    6. Larionov, Daniil & Pham, Hien & Yamashita, Takuro & Zhu, Shuguang, 2021. "First Best Implementation with Costly Information Acquisition," TSE Working Papers 21-1261, Toulouse School of Economics (TSE), revised Apr 2022.
    7. Robert A. Ritz, 2014. "On Welfare Losses Due to Imperfect Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 62(1), pages 167-190, March.
    8. Manara, Martina & Regan, Tanner, 2022. "Ask a local: improving the public pricing of land titles in urban Tanzania," LSE Research Online Documents on Economics 117856, London School of Economics and Political Science, LSE Library.
    9. Jan de Loecker & Jan Eeckhout & Simon Mongey, 2021. "Quantifying Market Power and Business Dynamism in the Macroeconomy," Working Papers 1251, Barcelona School of Economics.
    10. Garrett, Daniel F. & Georgiadis, George & Smolin, Alex & Szentes, Balázs, 2023. "Optimal technology design," Journal of Economic Theory, Elsevier, vol. 209(C).
    11. Amrita Ray Chaudhuri, 2014. "Cross-Border Mergers and Market Segmentation," Journal of Industrial Economics, Wiley Blackwell, vol. 62(2), pages 229-257, June.
    12. E. Glen Weyl & Michal Fabinger, 2013. "Pass-Through as an Economic Tool: Principles of Incidence under Imperfect Competition," Journal of Political Economy, University of Chicago Press, vol. 121(3), pages 528-583.
    13. Mustafa Dogan & Ju Hu, 2022. "Consumer search and optimal information," RAND Journal of Economics, RAND Corporation, vol. 53(2), pages 386-403, June.
    14. J. Peter Neary, 2016. "International Trade in General Oligopolistic Equilibrium," Review of International Economics, Wiley Blackwell, vol. 24(4), pages 669-698, September.
    15. Robert A. Ritz, 2018. "Oligopolistic competition and welfare," Chapters, in: Luis C. Corchón & Marco A. Marini (ed.), Handbook of Game Theory and Industrial Organization, Volume I, chapter 7, pages 181-200, Edward Elgar Publishing.
    16. Anja Prummer, "undated". "Discrimination in Promotion," Working Papers 905, Queen Mary University of London, School of Economics and Finance.
    17. Mark Armstrong & Jidong Zhou, 2022. "Consumer Information and the Limits to Competition," American Economic Review, American Economic Association, vol. 112(2), pages 534-577, February.
    18. Manara, Martina & Regan, Tanner, 2020. "Eliciting demand for title deeds: lab-in-the-field evidence from urban Tanzania," LSE Research Online Documents on Economics 107538, London School of Economics and Political Science, LSE Library.
    19. José Luis Moraga‐González & Evgenia Motchenkova & Saish Nevrekar, 2022. "Mergers and innovation portfolios," RAND Journal of Economics, RAND Corporation, vol. 53(4), pages 641-677, December.
    20. Yossi Spiegel, 2021. "The Herfindahl‐Hirschman Index and the Distribution of Social Surplus," Journal of Industrial Economics, Wiley Blackwell, vol. 69(3), pages 561-594, September.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wrk:warwec:1292. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Margaret Nash (email available below). General contact details of provider: https://edirc.repec.org/data/dewaruk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.