The Stable Coexistence of Oligopolies and the Competitive Fringe

V. Gonharenko (), Dmitry Pokrovsky and Alexander Shapoval
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V. Gonharenko: National Research University Higher School of Economics

HSE Working papers from National Research University Higher School of Economics

Abstract: In this paper, we introduce a simple new theory on mixed competition between oligopolistic firms and the competitive fringe, assuming a comparative advantage for big firms and free entry for small _rms. Oligopolies are defined as conglomerates, each part of which benefits from joint operations through lower costs. Our theory implies that (i) industries with a few oligopolies arise as a stable outcome of mixed competition; (ii) mixed competition differs from the monopolistic competition of single-product firms due to the underproduction of oligopolistic firms and differs from pure oligopolistic competition sine constraints on this underproduction are imposed by the competitive fringe; (iii) a positive shock in the market size an strengthen or weaken the competitiveness of the economy through the growth of the number of oligopolies

Keywords: mixed market structure; monopolistic competition; oligopolistic firms; general equilibrium; market size (search for similar items in EconPapers)
JEL-codes: D4 F11 L10 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2018
New Economics Papers: this item is included in nep-cse and nep-ind
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Published in WP BRP Series: Economics / EC, July 2018, pages 1-32

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Persistent link: https://EconPapers.repec.org/RePEc:hig:wpaper:196/ec/2018

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