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Discussion Paper Details

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Title: Do Other Firms Matter in Oligopolies?

Author(s): Jonathan Haskel and Pasquale Scaramozzino

Publication Date: June 1995

Keyword(s): Conjectural Variations, Oligopolies and Panel Data

Programme Area(s): Industrial Organization

Abstract: This paper examines how firms interact with their rivals. The main novelty of our approach is that we let conjectural variations depend on the actual ability of other firms to react, which we measure by both the physical capacity and financial status of firms. Our main findings are threefold. First, in general, spare physical capacity leads rival firms to conjecture more aggressive behaviour. Second, financial variables have a complex effect on conjectures. We interpret this as due to signalling effects being more important in some industries, and financial distress in others. Third, leader-follower interactions appear to be relevant in all of the industries considered.

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Bibliographic Reference

Haskel, J and Scaramozzino, P. 1995. 'Do Other Firms Matter in Oligopolies?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1194