Confronting the implications of the Cournot model with industry and firm data

This paper derives testable implications of the standard Cournot models and confronts these implications with real world data. Though we cannot expect that real world may be characterized by a simple static homogeneous model, it is surprising that little empirical work exists on testing the implications of this most popular model of oligopoly and non cooperative game theory.We make use of three data sets for manufacturing industry, two of them on the firm level, one about firms grouped according to their size. The relation of the results to the predictions of the Cournot model is discussed, as well as its relation to alternative oligopoly models. We specifically focus at the question whether the implications of the oligopoly models on the performance of large versus small firms are in line with the data.     

Entry liberalization and export performance: a theoretical analysis in a multi-market oligopoly model

This paper is an attempt to demonstrate how the entry (costless) of firms in an industry may have a dramatic effect on exports from an industry in a country. The results have tremendous implications for LDCs suffering from resource and BOP constraints but having reservoirs of cheap labor. The welfare effects of such entry liberalization policy (or subsidy) can be stated from the Bhagwati theorem that a reduction in an only (single) distortion is necessarily welfare improving by reducing monopoly or oligopoly distortions. However, we have shown that the entry liberalization policy is welfare superior to an equivalent subsidy policy where equivalent is defined in terms of the impact on exports. As a by product, we have also shown how one can integrate the oligopoly models of trade with the general oligopoly literature. The results on the limiting behaviour of an open economy oligopoly model extend the standard results in the oligopoly theory in a closed economy.     

技术溢出情况下寡头垄断企业合作创新效率的博弈分析

合作创新是典型的合作博弈,有关合作经济组织效率的研究是主流经济学家最有兴趣的主题之一。构造一个两阶段博弈模型对寡头垄断企业合作创新效率进行分析,旨在比较成本节约型寡头垄断企业合作创新与非合作创新的过程及绩效差异,包括市场产出、社会福利的变化,为企业合作创新过程中组织模式的选择提供理论依据     

Two and a Half Theories of Trade†

This paper discusses the place of oligopoly in international trade theory, and argues that it is unsatisfactory to ignore firms altogether, as in perfectly competitive models, or to view large firms as more productive clones of small ones, as in monopolistically competitive models. Doing either fails to account for the granularity in the size distribution of firms and for the dominance of large firms in exporting. The paper outlines three ways of developing more convincing models of oligopoly, which allow for free entry but do not lose sight of the grains in granularity: heterogeneous industries, natural oligopoly, and superstar firms.     

Mutual forbearance as an extension of oligopoly theory

This paper extends a simple duopoly model to include the cross-market effects of mutual forbearance behavior. The model yields more familiar duopoly results as special cases. A more general m-firm, n-market oligopoly model is also considered. The results suggest that cross-market mutual forbearance effects can be viewed from the same theoretical perspective as are conventional assumptions about conjectural variations within markets.     

跨国并购中的相互传导机制研究

本文以跨国并购的动因理论和跨国并购相互传导机制的相互依赖理论为基础,分析了抢占市场型、寻求资源型、寻求效率型等跨国并购的相互传导机制类型。基于发达国家与发达国家、发达国家与发展中国家两个层面分析了跨国并购的传导效应及跨国并购对发展中国家的寡占传导机制。并从技术进步、东道国的后续扩张、跨国公司跟随三个方面分析了跨国并购的持续性。     

A trade and domestic tax reform in imperfectly competitive markets

This paper develops a model of an export oligopoly to examine the welfare effects of an export tax reduction and a production tax increase that makes the foreign country no-worse off. Whether or not entry into the oligopolistic industry is free, the proposed policy reform is shown to reduce welfare of the policy-implementing country and the world. Relating this result to the perfectly competitive case, we closely discuss its implications.     

Subsidy‐induced Dumping

More than two‐thirds of all anti‐subsidy investigations in the EU are paired with an anti‐dumping investigation against the same non‐EU producers. The outcome may be a two‐component duty where one duty addresses the ‘unfairness’ of the subsidy and the other the dumping behaviour. The philosophy behind this practice is that, at least to some extent, the observed dumping has been induced by the subsidy, and as the GATT Treaty, Article VI commits the claimant not to impose double remedies for the same ‘misbehaviour’, it is necessary to make an assessment of the hypothetical dumping without the subsidy. The EU quantification of the hypothetical dumping margin assumes that an export subsidy translates fully to the dumping margin, while a domestic subsidy leaves the dumping margin unchanged. Using an oligopoly model, we show in this paper that in case of an export subsidy, the EU anti‐dumping duty is lower than the predicted hypothetical dumping margin from the oligopoly model. For a domestic subsidy, the results are ambiguous, and the difference between the size of the duty following the EU procedure and the model predictions is relatively small.     

Exclusive dealing and common agency in international markets

This paper investigates the contractual choice between exclusive dealing and common agency in a simple international oligopoly model where products are sold through intermediaries. We find that when trade barriers are high, domestic firms tend to adopt exclusive dealing contracts whereas trade liberalization may lead firms to choose common agency. Social welfare can be raised be prohibiting exclusive dealing (common agency) when trade barriers are high (low) and products are close substitutes.     

Prohibiting State Aid in an Integrated Market: Cournot and Bertrand Oligopolies with Differentiated Products

The prohibition of state aid in an integrated market such as the European Community is analyzed in a model where firms produce differentiated products and market structure is either Cournot or Bertrand oligopoly. State aid is financed by distortionary taxation so the opportunity cost of government revenue exceeds unity. Under both Cournot and Bertrand oligopoly, if products are sufficiently close substitutes then there exists a range of values for opportunity cost where governments give state aid and where the prohibition of state aid will increase aggregate welfare. With sufficiently differentiated products, the prohibition of state aid will reduce aggregate welfare.     

Oligopoly and trade: what, how much, and for whom?

This paper integrates the Cournot oligopoly model with the Ricardian comparative advantage model. The Ricardian trade pattern is robust, and only can be reversed in extreme conditions. Trade volume increases substantially with increases in competition in world export industries. In a symmetrical world, a threshold level of competition determines whether capitalists as a group usually gain or lose from trade. Under all circumstances workers never lose even if a country has a comparative disadvantage in a perfectly competitive world industry, but workers gain less in that country than they do in the rest of the world.     

基于寡头定价的动态频谱接入控制

为了解决频谱接入中主用户和次级用户交互信息过程复杂的问题,提出了一种基于寡头定价的动态频谱接入控制算法。该算法利用博弈论建立寡头定价模型,通过控制次级用户的频谱接入过程以实现系统收益的最大化,算法只需一次用户信息交互,且无需建立公共控制信道,网络拓扑结构简单。通过比较帕累托最优与全局最优的关系,实验计算与性能分析证明了该算法的有效性。     

International trade with endogenous mode of competition in general equilibrium

This paper endogenizes the extent of intra-sectoral competition in a multi-sectoral general-equilibrium model of oligopoly and trade. Firms choose capacity followed by prices. If the benefits of capacity investment in a given sector are below a threshold level, the sector exhibits Bertrand behavior, otherwise it exhibits Cournot behavior. By endogenizing the threshold parameter in general equilibrium, we show how exogenous shocks such as globalization and technological change alter the mix of sectors between “more” and “less” competitive, or Bertrand and Cournot, and affect the relative wages of skilled and unskilled workers, even in a “North–North” model with identical countries.     

Uncertainty and Endogenous Selection of Economic Equilibria

This paper presents a model of coordination failures based on market power and local oligopoly. The economy exhibits a multiplicity of Pareto‐ranked equilibria. The introduction of uncertainty generates an endogenous equilibrium selection process, due to a strategic use of information by firms. The economy is more likely to settle on some equilibria than on others. We argue that a full understanding of these robustness criteria is needed before any policy which is intended to help coordinate the level of activity to a Pareto‐dominant outcome can be successfully implemented.     

Competition in the Canadian Personal Finance Sector

This paper employs cross-section continuous time series data to examine competition in the Canadian personal finance sector for the period 1987–90. Using a generalised linear pricing model, firm entry is found to be significant in the setting of deposit and mortgage rates, suggesting the presence an incontestable market structure consistent with Cournot oligopoly. There is also evidence of price-making behaviour and relative bargainlripoff products. For three of the four products studied, a ‘fifth column’ consisting of the 12 major banks and trust companies best explain pricing in these markets     

THE EFFECTS OF LENIENCY PROGRAMS AND FINES ON CARTEL STABILITY

Using a stylized oligopoly model, we analyze the effect of cartel deterring fines, taking into consideration exemptions granted to cartel members cooperating with the competition authorities. We conclude that the fines can act as a deterrent to breaking collusive agreements, thus stabilizing the cartel.     

Economies as an Antitrust Defense Revisited: The Welfare Trade-offs and Safe Harbors

This paper incorporates a Cournot model of oligopoly pricing into Williamson’s (1968a) model to assess the welfare effect of a merger that yields economies and market power simultaneously. The results show: (i) in most cases, economies from mergers can offset price increases due to market power such that there are positive net allocative effects, and (ii) the safe harbors in the merger guidelines may fail to screen out mergers correctly. The reliability, however, can be improved by considering cost savings and price elasticities in addition to the current use of increases in HHI and post-merger HHIs.     

A GENERALIZED OLIGOPOLY MODEL WITH CONJECTURAL VARIATIONS

This paper considers a generalization of the Stackelberg model to cover a T‐stage framework with several leaders and followers who compete on quantities. Assuming a linear demand function and constant marginal costs, we introduce constant conjectural variations in order to capture various structures of competition. First, we characterize the equilibrium market outcome. Second, we study the influence of conjectures on welfare. We notably propose a welfare comparison for six symmetric equilibria. Third, we consider convergence analysis, and we also show that the competitive equilibrium is a consistent oligopoly equilibrium.     

Rivalry in uncertain export markets: commitment versus flexibility

This paper examines optimal trade policy in a two-period oligopoly model, with a home and a foreign firm choosing capital and output. Demand uncertainty, resolved in period two, gives rise to a trade-off between strategic commitment and flexibility in the firms’ investment decisions. Firms’ investment timing is endogenous and can be manipulated by the home government, which sets a subsidy before firms decide when to invest. We show that when the government wishes to manipulate investment timing, it will choose its policy to deter investment commitment by the home or the foreign firm.     

Internalization theory: An unfinished agenda

Internalization theory is usually applied at the firm level to analyse FDI, licensing and subcontracting. This paper extends it to the industry level. It synthesises internalization theory and oligopoly theory. It analyses a global industry where firms innovate competitively, and freely enter and exit the industry. It presents a formal model which highlights the inter-dependencies between rival firms. Each firm responds to its rivals by jointly optimising production and innovation through inter-dependent ownership and location decisions. The competitive outcome determines which firms serve which markets, which firms enter or exit the industry, and the internalization strategy of each firm.