ASYMMETRIC MULTIPRODUCT FIRMS, PROFITABILITY AND WELFARE

George Symeonidis ()

Bulletin of Economic Research, 2009, vol. 61, issue 2, 139-150

Abstract: In a differentiated multiproduct Cournot duopoly with linear demand, industry profit usually falls (even though concentration rises) when the distribution of products across firms becomes more asymmetric, if the products are not very differentiated or the total number of products is large. Consumer surplus and overall welfare always fall as the degree of asymmetry increases. These results contrast with the conventional wisdom on the effects of firm heterogeneity and the links between concentration and industry profits.

Date: 2009
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