Free entry under an output-cap constraint

Hiroaki Ino and Toshihiro Matsumura

Economics Letters, 2022, vol. 210, issue C

Abstract: This study considers a peer-to-peer market with capacity-constrained suppliers. We examine a free-entry market of individual suppliers and discuss the welfare consequences of Cournot competition. In contrast to the well-known “Excess entry theorem”, we show that the number of entries is socially optimal.

Keywords: Cournot competition; Excess entry theorem; Capacity constraint; Sharing economy; Private lodging business (search for similar items in EconPapers)
JEL-codes: D43 K25 L13 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:210:y:2022:i:c:s016517652100447x

DOI: 10.1016/j.econlet.2021.110192

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