 Intermediation by Heterogeneous OligopolistsKarl Morasch ()
A chapter in Operations Research Proceedings 2010, 2011, pp 41-46 from Springer Abstract: Abstract In his book on “Market Microstructure” Spulber presented some strange results with respect to the impact of the substitutability parameter in an intermediation model with differentiated products and inputs. Intuitively, effects in the product and the input market should be similar: if firms become more homogeneous, they loose market power, which should yield lower bid-ask-spreads and higher output. However, in Spulber’s analysis parameter changes in the product market yield qualitatively different results for bid–ask spreads and output than equivalent changes in the input market. The present paper shows that this outcome stems from an inadequate normalization of demand in upstream and downstream markets, respectively. By appropriately controlling for market size effects, intuitive results are obtained. Beyond that, a setting with appropriate normalization also allows to address the impact of changes in the number of competitors on the market outcome. Keywords: Demand Curve; Market Size; Competition Policy; Close Substitute; Perfect Competition (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:oprchp:978-3-642-20009-0_7 Ordering information: This item can be ordered from DOI: 10.1007/978-3-642-20009-0_7 Access Statistics for this chapter More chapters in Operations Research Proceedings from Springer |
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