Tight oligopolies: in search of proportionate remedies

Marcel Canoy and Sander Onderstal

No 29, CPB Document from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: Tight oligopolies are oligopolies the market characteristics of which facilitate the realisation of supranormal profits for a substantial period of time. We entangle the link between market structure and the possibility of welfare reducing behaviour by firms. A useful distinction can be made between ‘unilateral effects' (oligopolistic firms realise supra-normal profits without co-ordinating their strategies) and ‘co-ordinated effects' (oligopolistic firms realise supra-normal profits by co-ordinating their strategies).The study develops a ‘diagnostic approach', a tool that helps policy makers find proportionate remedies to tight oligopolies: (1) ‘prevent' a market from becoming a tight oligopoliy; (2) ‘cure' a currently tight oligopoly by changing the market structure; and (3) treat the symptoms of an established tight oligopoly. We apply this diagnostic approach to six cases of (potentially) tight oligopolies.

JEL-codes: L13 L4 (search for similar items in EconPapers)
Date: 2003-02
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Citations: View citations in EconPapers (12)

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