Citation

Discussion Paper Details

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Title: Aggregate Oligopoly Games with Entry

Author(s): Simon P Anderson, Nisvan Erkal and Daniel Piccinin

Publication Date: June 2013

Keyword(s): aggregative games, contests, Cournot, entry, IIA property, leadership, Logit/CES, mergers, monopolistic competition, oligopoly theory, R&D and strategic substitutes and complements

Programme Area(s): Industrial Organization

Abstract: We use cumulative reaction functions to compare long-run market structures in aggregative oligopoly games. We first compile an IO toolkit for aggregative games. We show strong neutrality properties across market structures. The aggregator stays the same, despite changes in the number of firms and their actions. The IIA property of demands (CES and logit) implies that consumer surplus depends on the aggregator alone, and that the Bertrand pricing game is aggregative. We link together the following results: merging parties' profits fall but consumer surplus is unchanged, Stackelberg leadership raises welfare, monopolistic competition is the market structure with the highest surplus.

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Bibliographic Reference

Anderson, S, Erkal, N and Piccinin, D. 2013. 'Aggregate Oligopoly Games with Entry'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9511