Competition among the big and the small

Ken-Ichi Shimomura () and Jacques Thisse
Additional contact information
Ken-Ichi Shimomura: RIEB, Kobe University

No 2012009, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Many industries are made of a few big firms, which are able to manipulate the market outcome, and of a host of small businesses, each of which has a negligible impact on the market. We provide a general equilibrium framework that encapsulates both market structures. Due to the higher toughness of competition, the entry of big firms leads them to sell more through a market expansion effect generated by the shrinking of the monopolistically competitive fringe. Furthermore, social welfare increases with the number of big firms because the pro-competitive effect associated with entry dominates the resulting decrease in product diversity.

Keywords: oligopoly; monopolistic competition; product differentiation; welfare (search for similar items in EconPapers)
JEL-codes: L13 L40 (search for similar items in EconPapers)
Date: 2012-03-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (64)

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https://sites.uclouvain.be/core/publications/coredp/coredp2012.html (application/pdf)

Related works:
Journal Article: Competition among the big and the small (2012)
Working Paper: Competition Among the Big and the Small (2012)
Working Paper: Competition among the big and the small (2009)
Working Paper: Competition Among the Big and the Small (2009)
Working Paper: Competition Among the Big and the Small (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2012009

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