Economics at your fingertips  

The desirability of the supply function competition under demand uncertainty

Ismail Saglam

Economics Bulletin, 2018, vol. 38, issue 1, 541-549

Abstract: In this paper, we consider an oligopolistic industry with demand uncertainty and study the welfare comparison between the supply function competition and the stochastic Cournot competition. We prove that the expected consumer surplus is always higher under the supply function competition. By numerical computations we also show that the expected profits of the oligopolistic firms can be higher under the supply function competition only if the demand uncertainty is above a critical threshold. This threshold is increasing in the number of firms, while decreasing in the slope of the demand curve and the marginal cost of producing a unit output.

Keywords: Supply function competition; Cournot competition; oligopoly; uncertainty (search for similar items in EconPapers)
JEL-codes: D4 L1 (search for similar items in EconPapers)
Date: 2018-03-23
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().

Page updated 2019-09-27
Handle: RePEc:ebl:ecbull:eb-18-00076