Nonparallel demand increases in an asymmetric Cournot oligopoly

Yuqing Zheng and Harry Kaiser

Applied Economics Letters, 2010, vol. 17, issue 9, 829-833

Abstract: We examine equilibrium responses of a Cournot oligopoly to two typical types of nonparallel demand increases. The results based on a linear demand curve show that in terms of profits, increases in demand that result in a more elastic demand curve are beneficial to every firm, with large firms benefiting disproportionately. In sharp contrast, only certain small firms benefit from demand increases that result in a more inelastic demand. Our results have implications in marketing and government policy making.

Date: 2010
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DOI: 10.1080/13504850802552317

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