Efficiency and surplus bounds in Cournot competition

Simon Anderson and Régis Renault

Virginia Economics Online Papers from University of Virginia, Department of Economics

Abstract: We derive bounds on the ratios of deadweight loss and consumer surplus to producer surplus under Cournot competition. To do so, we introduce a parameterization of the degree of curvature of market demand using the parallel concepts of ?-concavity and ?-convexity. The ?more concave? is demand, the larger the share of producer surplus in overall surplus, the smaller is consumer surplus relative to producer surplus, and the lower the ratio of deadweight loss to producer surplus. Deadweight loss over total potential surplus is at Þrst increasing with demand concavity, then eventually decreasing. The analysis is extended to asymmetric Þrm costs.

Keywords: Cournot equilibrium; social surplus analysis; deadweight loss; market performance. (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2001-04
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Citations: View citations in EconPapers (5)

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http://repec.as.virginia.edu/RePEc/vir/virpap/papers/virpap360.pdf (application/pdf)

Related works:
Journal Article: Efficiency and surplus bounds in Cournot competition (2003)
Working Paper: Effciency and surplus bounds in Cournot competition (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:vir:virpap:360

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