Aggregate Oligopoly Games with Entry

Simon Anderson, Daniel Piccinin and Nisvan Erkal

No 9511, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We use cumulative reaction functions to compare long-run market structures in aggregative oligopoly games. We first compile an IO toolkit for aggregative games. We show strong neutrality properties across market structures. The aggregator stays the same, despite changes in the number of firms and their actions. The IIA property of demands (CES and logit) implies that consumer surplus depends on the aggregator alone, and that the Bertrand pricing game is aggregative. We link together the following results: merging parties' profits fall but consumer surplus is unchanged, Stackelberg leadership raises welfare, monopolistic competition is the market structure with the highest surplus.

Keywords: Aggregative games; Oligopoly theory; Entry; Strategic substitutes and complements; Iia property; Mergers; Leadership; Contests; Monopolistic competition; Logit/ces (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2013-06
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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