Price-quantity competition with varying toughness

Claude d'Aspremont and Rodolphe Dos Santos Ferreira

Games and Economic Behavior, 2009, vol. 65, issue 1, 62-82

Abstract: For an industry producing a single homogeneous good, we define and characterize the concept of oligopolistic equilibrium, allowing for a parameterized continuum of regimes with varying competitive toughness. This parameterization will appear to be equivalent to the one used in the empirical literature. The Cournot and the competitive outcomes coincide, respectively, with the softest and the toughest oligopolistic equilibrium outcome. The concept offers an alternative to the conjectural variations approach with better foundations. It can be viewed as a canonical description of oligopolistic behavior which can receive different theoretical justifications and provide a convenient tool for modeling purposes. Two illustrative cases (linear and isoelastic demands) are developed and the possibility of endogenizing (strategically) the choice of competitive toughness by the firms is examined.

Keywords: Oligopolistic; equilibrium; Competitive; toughness; Price-quantity; competition; Market; share; Market; size; Kinked; demand; Cournot-Bertrand; debate (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Related works:
Working Paper: Price-quantity competition with varying toughness (2009)
Working Paper: Price-quantity competition with varying toughness (2006)
Working Paper: Price-quantity competition with varying toughness (2004)
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