Successive Oligopolies and Decreasing Returns

Skerdilajda Zanaj

The B.E. Journal of Theoretical Economics, 2010, vol. 10, issue 1, 26

Abstract: In this paper, we analyze successive oligopolies where downstream firms share the same decreasing returns technology of the Cobb-Douglas type. We stress the differences between the conclusions obtained under this assumption and those resulting from the traditional literature in which output firms use a constant returns technology. It is shown that when firms use a decreasing returns technology, (i) the profit of a downstream firm can decrease when the upstream market is more competitive; (ii) the input price does not tend to the corresponding marginal cost when the number of firms in both markets tends to infinite; and (iii) double marginalization is lower. Finally, the effects of mergers are revisited to highlight the role played by the technology of output firms.

Keywords: successive oligopolies; downstream technology; mergers (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Successive oligopolies and decreasing returns (2008)
Working Paper: Successive oligopolies and decreasing returns (2008)
Working Paper: Successive oligopolies and decreasing returns (2008)
Working Paper: Competition in successive markets: entry and mergers (2006)
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DOI: 10.2202/1935-1704.1595

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