Rationalizability and Efficiency in an Asymmetric Cournot Oligopoly

Gabriel Desgranges and Stephane Gauthier

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

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: Competition policy; Cournot oligopoly; dominance solvability; efficiency; rationalizability; stability; airline industry (search for similar items in EconPapers)
JEL-codes: D43 D84 L40 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2014-03, Revised 2015-10
New Economics Papers: this item is included in nep-com
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Downloads: (external link)
ftp://mse.univ-paris1.fr/pub/mse/CES2014/14028R.pdf (application/pdf)

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