Aggregative games and oligopoly theory: short‐run and long‐run analysis

Simon Anderson, Nisvan Erkal and Daniel Piccinin

RAND Journal of Economics, 2020, vol. 51, issue 2, 470-495

Abstract: We compile an IO toolkit for aggregative games with positive and normative comparative statics results for asymmetric oligopoly in the short and long run. We characterize the class of aggregative Bertrand and Cournot oligopoly games, and the subset for which the aggregate is a summary statistic for consumer welfare. We close the model with a monopolistically competitive fringe for long‐run analysis. Remarkably, we show strong neutrality properties in the long run across a wide range of market structures. The results elucidate aggregative games as a unifying principle in the literature on merger analysis, privatization, Stackelberg leadership, and cost shocks.

Date: 2020
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