Soft-Capacity constrained price competition with entry and a minimum firm size: Chamberlin without differentiation

Marie-Laure Cabon-Dhersin () and Nicolas Drouhin ()
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Marie-Laure Cabon-Dhersin: CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université

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Abstract: We consider a model of price competition in a homogeneous good, with soft-capacity constraints, in the special case of a Sone-Geary production function that implies a minimum firm size and leads to a U-shaped average cost function. We study free entry and obtain a Chamberlin-like result: zero profit and a positive markup at equilibrium.

Keywords: price competition; soft-capacity constraint; tacit collusion; returns to scale; free-entry (search for similar items in EconPapers)
Date: 2020-07-31
New Economics Papers: this item is included in nep-bec and nep-com
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