COMPARING COURNOT DUOPOLY AND MONOPOLY WITH ASYMMETRIC DIFFERENTIATED GOODS

Ming Chung Chang, Yun-Chieh Lin and Chiu Fen Lin

Hitotsubashi Journal of Economics, 2012, vol. 53, issue 2, 177-200

Abstract: This study compares a differentiated Cournot duopoly with a two-product monopoly by using the socially optimal solution as a reference point. Each solution is allowedto be either an interior or a corner solution. We establish that the ranking regarding each individual price is clear-cut and normal. In contrast, every one of the rankings regarding individual outputs and industry output can go either way. More importantly, the duopoly may be less welfare-efficient than the monopoly. For example, when demands are linear, lower welfare is achieved if the asymmetry between firms is strong enough. One reason is that when firms are asymmetric, the output structure in the duopoly is distorted with probability one, whereas the output structure in the monopoly is generally socially optimal.

Keywords: Cournot duopoly; multi-product monopoly; output structure; horizontal merger; antitrust policy (search for similar items in EconPapers)
JEL-codes: L12 L13 L41 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitjec:v:53:y:2012:i:2:p:177-200

DOI: 10.15057/25380

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