Competition Policy at the Intensive and Extensive Margins in General Equilibrium

Kenji Fujiwara () and Keita Kamei

No 954, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: This paper examines welfare effects of competition policies in a gen- eral equilibrium model in which perfectly competitive and oligopolistic industries coexist and compete for a common factor of production. We first show that increasing the number of oligopolistic firms raises wel- fare if the oligopolists' production technology exhibits non-increasing returns to scale. Then, we address another competition policy mod- eled by an increase in the portion of perfectly competitive industries, finding that this policy improves welfare if decreasing returns of the oligopolists' technology are strong enough. These results suggest that the degree of returns to scale plays a key role for welfare-enhancing competition policy.

Keywords: Competition policy; General oligopolistic equilibrium (GOLE); Welfare; Returns to scale. (search for similar items in EconPapers)
JEL-codes: L13 L4 (search for similar items in EconPapers)
Pages: 15pages
Date: 2016-11
New Economics Papers: this item is included in nep-com
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Persistent link: https://EconPapers.repec.org/RePEc:kyo:wpaper:954

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