Journal Article

On the Effects of Entry in Cournot Markets

Rabah Amir and Val E. Lambson

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 67, issue 2, pages 235-254
Published in print April 2000 | ISSN: 0034-6527
Published online April 2000 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/1467-937X.00129
On the Effects of Entry in Cournot Markets

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In the framework of symmetric Cournot oligopoly, this paper provides two minimal sets of assumptions on the demand and cost functions that imply respectively that, as the number of firms increases, the minimal and maximal equilibria lead to (i) decreasing industry price and increasing or decreasing per-firm output; and (ii) increasing industry price (and decreasing per firm output.) In both cases, per-firm profits are decreasing.

The analysis relies crucially on lattice-theoretic methods and yields general, unambiguous and easily interpretable conclusions of a global nature. As a byproduct of independent interest, new insight into the existence of Cournot equilibrium is developed.

Journal Article.  0 words. 

Subjects: Economics

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