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.     

Entry and Component Pricing in Regulated Markets

This paper discusses work on computable models of entry into regulated markets. Cournot, Stackelberg and Fringe entry are considered for the case where the incumbent operator‘s profitability is regulated and component pricing influences the desirability of entry. The simulation results illustrate that welfare optimal component pricing can be highly sensitive to model specification (behavioural assumptions about agents, the nature of competition, the extent of product differentiation etc.) and that no welfare ranking of simple component pricing rules (such as marginal cost, average cost, opportunity cost or efficient component price) exists. In addition, the welfare desirability of entry is seen to be sensitive to the choice of welfare benchmark for comparison     

食品安全问题：揭发或模仿的影响因素研究

食品质量难以被检测导致了食品安全问题频繁出现。为了解决这一问题,需要设计一种市场竞争环境,激励厂商揭发制造有毒食品的行为。通过数字例子对古诺竞争、斯坦克博格竞争、价格领导者竞争及差异化竞争等,厂商模仿或揭发激励相容条件的对比分析,得出产量竞争相对于价格竞争,在提高市场集中度时更能有效的提高食品安全。产品差异化水平较高时,价格竞争更有利于提高食品安全。需求弹性只有在价格竞争时才发挥作用。     

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.     

Maximum-Revenue and Optimum-Welfare Tariffs in International Mixed Duopoly: Does the Order of Firms’ Move Matter?

This paper examines the effect of privatization on the priority of the maximum-revenue tariff and the optimum-welfare tariff in a mixed oligopoly with partial privatization and foreign competition. Major findings of this paper are that: firstly, in a mixed duopoly with partial privatization and asymmetric marginal costs, when the marginal cost of the privatized firm is higher than a critical value, the optimum-welfare tariff will be lower than the maximum-revenue tariff regardless of the order of firms?? move; secondly, if the degree of privatization is sufficiently high and cost is symmetric, the optimum-welfare tariff will be higher than the maximum-revenue tariff; thirdly, if the degree of privatization is sufficiently high and the domestic firm is highly ineffective in production, under Stackelberg public leadership, the optimum-welfare tariff is low and then it is more possible that the optimum-welfare tariff is lower than the maximum-revenue one.     

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     

R&D organization and technology transfer

In this paper we consider a Cournot duopoly model to examine the effects of licensing on R&D organization. When firms do cooperative R&D to share the cost of R&D, possibility of licensing can influence the decision on R&D organization. But, if the firms do cooperative R&D to avoid duplication in R&D process, possibility of licensing may influence the decision on R&D organization, provided one firm behaves like a Stackelberg leader in the product market.     

Welfare-optimal trade and competition policies in small open oligopolistic economies

Standard trade theory claims that free trade is welfare-enhancing. We show that this is not the case if at least one sector of the economy is a Cournot oligopoly. In a simple small open economy with one oligopolistic and one competitive sector, welfare is an inverted U-shaped function of tariffs. Hence, an optimal tariff rate can be determined. The optimal rate depends on the number of firms in the oligopolistic sector. Below the optimal level, the competitive sector overproduces, i.e. oligopolistic good have a higher marginal effect on welfare. Increasing tariff rates stimulate the production of the oligopolistic sector by dampening imports. Under balanced trade, this reduces exports and production in the competitive sector, thus shifting resources to oligopolistic goods production. We also find that given certain levels of protection, perfect competition is not welfare maximal and, hence, not desirable. The finding explains why developing economies with imperfect competition are often reluctant to embrace trade liberalization and why, conversely, countries with high levels of external protection may be unenthusiastic about competition theory.     

Product market competition and access to credit

In this paper, we unveil a disregarded benefit of product market competition for firms. We introduce the probability of bankruptcy in a simple model where firms compete à la Cournot and apply for collateralized bank loans to undertake productive investments. We show that the number of competitors and the existence of outsiders willing to acquire the productive assets of distressed incumbents affect the equilibrium share of investment financed by bank credit. Using a sample of Italian manufacturing firms, mostly small- and medium-sized enterprises (SMEs), we found evidence showing that the degree of product market competition is positively correlated with the share of investment financed by bank credit only when outsiders are absent.     

Input Pricing and Market Share Delegation in a Vertically Related Market: Is the Timing Order Relevant?

This paper adds to the literature on the strategic use of managers’ contracts in competition by examining whether market‐share delegation, in which managers receive rewards based on a combination of profits and market share, and the order of moves affect input pricing in a vertically related market. It shows that: (i) input pricing is not affected by delegation form and the order of moves between upstream and downstream firms under quantity competition; (ii) downstream firms obtain the same profit as in the simple Nash equilibrium regardless of delegation forms in a delegation–input price–quantity competition game; and (iii) the upstream monopolist will set input price beforehand regardless of the delegation form. Since the outcomes in our model create higher quantity and lower price in a Cournot product market, it lessens the double‐marginalization problem in such a vertically separated industry.     

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.     

Intellectual property pricing under asymmetric duopoly

Patent price is the key for intellectual property (IP) trade and IP financing. By duopoly model, this article develops the theory of patent price. First, patent increases consumer surplus. Second, the firm with higher marginal costs prices patent higher than others. Finally, the firm with higher marginal costs prices patent higher under Stackelberg situation than that under Cournot cases.     

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.     

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.     

双寡头企业产量竞争的均衡质量安全水平研究——以受规制的食品企业为例

在双寡头企业产量竞争的基本模型基础上,考虑了政府规制水平的影响,分析了生产高、低质量安全水平的两个食品企业分别在古诺和斯塔克尔伯格博弈模型中的均衡质量水平及其相互关系,结果揭示了不同模型中两个企业的最优质量安全水平之间的关系及其均衡点。在斯塔克尔伯格模型中,以生产高质量安全水平产品的企业为产量领导者时,其产品质量安全水平、价格、产量和利润远高于追随企业;两个企业的均衡质量安全水平、价格和产量都随着政府相关部门规制水平的提高而上升。     

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.     

考虑存在平行进口的跨国供应链价格竞争研究

跨境电商以及配套物流网络的快速发展致使平行进口对部分行业产生了巨大影响。通过建立三种市场权力模式下跨国制造商与本地制造商的博弈模型,本文对比分析有无灰色市场的不同模式供应链参与者的定价及利润,探析平行进口对低支付意愿市场的跨国制造商与本地制造商之间寡头竞争的影响。研究发现:市场支付意愿比值低于某一阈值时不会出现平行进口,市场权力模式和灰色市场的存在能影响跨国供应链参与者的收益多寡及定价策略;灰色市场有益于本地制造商和平行进口商,市场处于单一制造商主导模式有助于减少跨国制造商损失、增加本地制造商收益及缩减平行进口商的利润,在制造商共同主导模式下存在一个市场支付意愿比值区间,致使跨国制造商收益增加;平行进口促进还是抑制寡头供应链的价格竞争,取决于市场权力的结构形式。     

Profit reducing international outsourcing

Recent empirical evidence shows a negative relationship between international outsourcing and profitability. This paper provides a theoretical explanation for this phenomenon. We show that, in an oligopolistic market, firms earn lower profits in the outsourcing equilibrium compared to the situation where neither firm does outsourcing, and this holds irrespective of the intensity of competition. We show that whether international outsourcing is likely to reduce profit under more intense competition (measured by the degree of product differentiation, number of firms and the type of product market competition, namely, Cournot and Bertrand competition) is ambiguous. We further show that international outsourcing may be socially ‘excessive’ for the sourced country and for the world.     

基于空间和时间维度的航空公司价格博弈

我国民航业经过多年来的运价改革和不断放松管制,已经逐步形成了比较典型的寡头垄断市场,航空公司间的竞争态势也日趋激烈。但由于缺乏其他有效的手段,航空公司间的竞争主要表现为价格战。本文运用伯川德、豪泰林等模型方法,从空间和时间两个维度,对航空公司间的价格博弈行为进行了系统分析,证明了实行多种差异化服务和提高网络干线市场集中度是航空公司确立竞争优势的基本途径。     

Optimal Timing of Advertising with Demand Spillovers

We construct a model of a horizontally differentiated duopoly with demand spillovers in which advertising influences the willingness-to-pay of consumers for products and thereby affects not only market share, but also the level of market demand. Furthermore, firms decide the timing as well as the level of advertising. We first derive a subgame perfect Nash equilibrium and Stackelberg equilibria in the advertising competition. Then, using the framework of an endogenous timing decision game with an observable delay (i.e., Hamilton and Slutsky, Games Econ Behavior 2: 29–46, 1990), we consider the optimal timing of advertising. We demonstrate that the optimal timing depends on the degree of demand spillovers and the product substitutability. In particular, if there are sufficient asymmetric demand spillovers between firms, there is a unique Stackelberg equilibrium in the advertising competition, in which the firm providing the product with small (large) demand spillovers chooses to invest in advertising early (late), regardless of the mode of competition.