On Cournot's theory of oligopoly with perfect complements

Rabah Amir () and Adriana Gama ()
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Rabah Amir: University of Iowa
Adriana Gama: El Colegio de Mexico

Serie documentos de trabajo del Centro de Estudios Económicos from El Colegio de México, Centro de Estudios Económicos

Abstract: This paper provides a thorough characterization of the properties of Cournot’s complementary monopoly model (or oligopoly with perfect complements) in a general setting, including existence, uniqueness and the comparative statics effects of entry. As such, this serves to unify various results from the extant literature that have typically been derived with limited generality. In addition, several studies have suggested that Cournot’s complementary monopoly model is the dual problem to the standard Cournot oligopoly model. This result crucially relies on the assumption that the firms have no production costs. This paper shows that if the production costs of the firms are different from zero, the nice duality between these two oligopoly settings breaks down. One implication of this breakdown is that, in contrast to the Cournot model, oligopoly with perfect complements can be a game of strategic complements in a global sense even in the presence of production costs.

Keywords: oligopoly with perfect complements; price competition; horizontal integration; supermodularity (search for similar items in EconPapers)
JEL-codes: C72 D43 L13 (search for similar items in EconPapers)
Date: 2025-05
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Persistent link: https://EconPapers.repec.org/RePEc:emx:ceedoc:2025-04

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