Idiosyncratic shocks in an asymmetric Cournot oligopoly

Février, Philippe; Linnemer, Laurent

doi:10.1016/j.ijindorg.2004.04.002

Cited by 52 publications

(56 citation statements)

References 19 publications

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“…When firms are heterogenous with respect to their size and technologies, identical and symmetric demand shocks affect them differently: the input demands of smaller firms may shrink while those of bigger firms increase. A related issue has, for instance, been studied by Février and Linnemer (2004) who consider the impact of a cost shock on aggregate profits and welfare. Our paper focuses on input demands, and shows that despite heterogenous reactions at the micro level, the aggregate reaction is well determined.…”

Section: Introductionmentioning

confidence: 99%

Aggregation with Cournot Competition: the Le Chatelier Samuelson Principle

Koebel¹,

Laisney²

2014

Annals of Economics and Statistics

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Abstract. This paper studies the aggregate substitution and expansion effects triggered by changes in input prices in a context where firms supply a homogeneous commodity and compete in quantities à la Cournot. We derive a sufficient condition for the existence of a Cournot equilibrium and show that this condition also ensures that the Le Chatelier-Samuelson principle is satisfied in the aggregate at the Cournot equilibrium, although it may not be satisfied at the firm level.

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Section: Introductionmentioning

confidence: 99%

Aggregation with Cournot Competition: the Le Chatelier Samuelson Principle

Koebel¹,

Laisney²

2014

Annals of Economics and Statistics

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“…Kimmel (1992) extends this analysis to an oligopoly where rms face dierent costs of production but are subject to an identical negative shock. Février and Linnemer (2004) synthesize this literature by studying a general framework with heterogeneous costs and idiosyncratic shocks. Kotchen and Salant (2011) analyze the impact of a tax on industry prots in the context of a common-pool resource and highlight some analogues with Seade's analysis.…”

Section: Relation To the Literaturementioning

confidence: 99%

Pollution Permits, Imperfect Competition and Abatement Technologies

2013

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractUnder imperfect competition, the eect of a cap-and-trade system on industry prots depends on the type of abatement technology that is used by rms: industries that use process-integrated technologies are more aected than those using end-of-pipe abatement technologies. The interaction between environmental policy and the evolution of the market structure is then studied. In particular, a reserve of pollution permits for new entrants is justied when the industry uses a process-integrated abatement technology, while a system with a preemption right may be justied in the case of end-of-pipe abatement technology.JEL Classication: L13, Q53, Q58.

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“…First, we do not wish to jump to an explanation why some firm's costs are high (we only explained why some firms are unwilling to reduce costs), although our numerical example indicates so (i.e., a firm could increase its profits by overly increasing its costs). 6 However, we believe that our analysis can be modified so that future studies can explain why 6 A real firm might not want to take such cost-increasing measures (such as paying its workers a higher wage), because the profit increase is small as compared with possible damage to its reputation, and the firm might be prevented from paying a higher wage to its workers in the small and inefficient unit by union contract, because workers in other (efficient) units also are entitled to a pay raise. some firms' costs are high, by analyzing, for example, a two-stage cost-setting model in which firms first choose costs and then engage in price competition.…”

Section: Cost Reductions In Price Competitionmentioning

confidence: 99%

Why are firms sometimes unwilling to reduce costs?

Wang

Zhao

2010

J. Econ.

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This paper establishes three new results for multiproduct oligopolies: 1) it presents the first explicit expression of Nash equilibria for asymmetric multiproduct oligopolies; 2) it shows that reducing a multiproduct firm's cost in Bertrand oligopolies will reduce its profits if the cost-reducing unit is sufficiently small; and 3) it demonstrates that a multiproduct firm has no incentive to eliminate a product whose sales are zero. Because a single-product firm whose sales are zero is indifferent between exiting and staying, and its cost reductions always increase its profits, our results are unique to the multiproduct firm, and they suggest that extending oligopoly studies from a single product to multi-products could be as significant as the extension of calculus from a single variable to multi-variables.

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Idiosyncratic shocks in an asymmetric Cournot oligopoly

Cited by 52 publications

References 19 publications

Aggregation with Cournot Competition: the Le Chatelier Samuelson Principle

Aggregation with Cournot Competition: the Le Chatelier Samuelson Principle

Pollution Permits, Imperfect Competition and Abatement Technologies

Why are firms sometimes unwilling to reduce costs?

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