Contestability and the indeterminacy of free entry equilibria

d’ASPREMONT, Claude (), Rodolphe Dos Santos Ferreira and Louis-André Gérard-Varet
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d’ASPREMONT, Claude: Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium
Authors registered in the RePEc Author Service: Claude d'Aspremont

No 1997073, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: A general notion of market perfect contestability is introduced. It coincides with the definition given by Baumol et al. under Bertrand competition, but is compatible with other forms of competition : Cournot competition as well as monopolistic competition. Using this notion, we illustrate the fact that the number of active firms in free entry equilibrium may be largely indeterminate and different levels of positive profits may in many cases be sustained. This is shown to be true, in spite of market perfect contestability, either under Cournot competition or under product differentiation. Examples are given for both cases. Appropriate conditions of increasing returns are required.

JEL-codes: D43 D5 (search for similar items in EconPapers)
Date: 1997-10-01
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Contestability and the Indeterminacy of Free-Entry Equilibria (2000)
Working Paper: Contestability and the indeterminacy of free-entry equilibria (2000)
Working Paper: Contestability and the Indeterminacy of Free Entry Equilibria (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:1997073

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