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Rationalizability and Efficiency in an Asymmetric Cournot Oligopoly

Gabriel Desgranges and Stephane Gauthier

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Abstract: This paper studies rationalizability in a linear asymmetric Cournot oligopoly with a unique Nash equilibrium. It shows that mergers favors uniqueness of the rationalizable outcome. When requires uniqueness of the rationalizable outcome maximization of consumers' surplus may involve a symmetric oligopoly with few firms. We interpret uniqueness of the rationalizable outcome as favoring a dampening of strategic ‘coordination' uncertainty. An illustration to the merger between Delta Air Lines and Northwest shows that a reallocation of 1% of market share from a small carrier to a larger one has implied a lower production volatility over time, yielding a 1.5% decrease in the coefficient of variation of number of passengers.

Keywords: rationalizability; stability; airline industry; competition policy; Cournot oligopoly; dominance solvability; efficiency (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-com and nep-ind
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00975002v3
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Published in 2015

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Related works:
Journal Article: Rationalizability and efficiency in an asymmetric Cournot oligopoly (2016) Downloads
Working Paper: Rationalizability and Efficiency in an Asymmetric Cournot Oligopoly (2016)
Working Paper: Rationalizability and Efficiency in an Asymmetric Cournot Oligopoly (2015)
Working Paper: Rationalizability and Efficiency in an Asymmetric Cournot Oligopoly (2015) Downloads
Working Paper: Rationalizability and Efficiency in an Asymmetric Cournot Oligopoly (2015)
Working Paper: Rationalizability and Efficiency in an Asymmetric Cournot Oligopoly (2015)
Working Paper: Rationalizability and Efficiency in an Asymmetric Cournot Oligopoly (2015) Downloads
Working Paper: Rationalizability and Efficiency in an Asymmetric Cournot Oligopoly (2014)
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