Oligopoly Pricing: The Role of Firm Size and Number

Iwan Bos and Marco Marini

Games, 2022, vol. 14, issue 1, 1-16

Abstract: This paper examines a homogeneous-good Bertrand–Edgeworth oligopoly model to explore the role of firm size and number in pricing. We consider the price impact of merger, break up, investment, divestment, entry and exit. A merger leads to higher prices only when it increases the size of the largest seller and industry capacity is neither too big nor too small post-merger. Similarly, breaking up a firm only leads to lower prices when it concerns the biggest producer and aggregate capacity is within an intermediate range. Investment and entry (weakly) reduce prices, whereas divestment and exit yield (weakly) higher prices. Taken together, these findings suggest that size matters more than number in the determination of oligopoly prices.

Keywords: Bertrand–Edgeworth competition; Edgeworth price cycle; firm size distribution; oligopoly pricing; price dispersion (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2073-4336/14/1/3/pdf (application/pdf)
https://www.mdpi.com/2073-4336/14/1/3/ (text/html)

Related works:
Working Paper: Oligopoly pricing: the role of firm size and number (2022)
Working Paper: Oligopoly Pricing: The Role of Firm Size and Number (2022)
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: https://EconPapers.repec.org/RePEc:gam:jgames:v:14:y:2022:i:1:p:3-:d:1019076

Access Statistics for this article

Games is currently edited by Ms. Susie Huang

More articles in Games from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().