Author: Shyh-Fang Ueng
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 118
Book Description
This research investigates three issues related to the economic performance of oligopolistic markets where firms produce differentiated products and compete in prices. First of all, this dissertation uses a Markov Perfect Equilibrium approach with fixed periods of commitment of actions to answer the question of what prices a duopolists will charge in equilibrium if they produce horizontally differentiated products, move alternatingly, and compete in prices forever. It is found that firms charge prices which are higher than Nash equilibrium prices but lower than the fully collusive equilibrium prices. Also, contrasted with the Nash equilibrium of the one-shot constituent game, the firm having the significantly higher demand responsiveness to its own price always charges a lower price than the other firm does although it has higher marginal cost. The dissertation then proceeds to study whether a firm can overcome its cost disadvantage by upgrading its product over the rival's, and if so, whether there exists a profit-division which will induce the low cost firm and the high cost firm to collude and no one has an incentive to cheat. The results show that (1) the ability of upgrading the product over the rival's can allow a high cost firm to earn higher profit than a cost advantaged low cost firm; (2) there exists at least one profit-division which can sustain full collusion; and (3) in the collusive equilibrium firms enlarge their quality differences to alleviate the price tension between their products. Finally, this work investigates the welfare effect of mergers which occur in an oligopolistic industry where firms produce differentiated products. It is shown that for the merger to be socially beneficial, the number of the merging firms must be less than the total number of firms in the industry minus the ratio of the products' own elasticity to cross elasticity. The analysis indicates that the welfare effect of a merger of a specific size depends on the substitutability among products of the industry.
Three Essays on Price Competition in Oligopoly
Author: Shyh-Fang Ueng
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 118
Book Description
This research investigates three issues related to the economic performance of oligopolistic markets where firms produce differentiated products and compete in prices. First of all, this dissertation uses a Markov Perfect Equilibrium approach with fixed periods of commitment of actions to answer the question of what prices a duopolists will charge in equilibrium if they produce horizontally differentiated products, move alternatingly, and compete in prices forever. It is found that firms charge prices which are higher than Nash equilibrium prices but lower than the fully collusive equilibrium prices. Also, contrasted with the Nash equilibrium of the one-shot constituent game, the firm having the significantly higher demand responsiveness to its own price always charges a lower price than the other firm does although it has higher marginal cost. The dissertation then proceeds to study whether a firm can overcome its cost disadvantage by upgrading its product over the rival's, and if so, whether there exists a profit-division which will induce the low cost firm and the high cost firm to collude and no one has an incentive to cheat. The results show that (1) the ability of upgrading the product over the rival's can allow a high cost firm to earn higher profit than a cost advantaged low cost firm; (2) there exists at least one profit-division which can sustain full collusion; and (3) in the collusive equilibrium firms enlarge their quality differences to alleviate the price tension between their products. Finally, this work investigates the welfare effect of mergers which occur in an oligopolistic industry where firms produce differentiated products. It is shown that for the merger to be socially beneficial, the number of the merging firms must be less than the total number of firms in the industry minus the ratio of the products' own elasticity to cross elasticity. The analysis indicates that the welfare effect of a merger of a specific size depends on the substitutability among products of the industry.
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 118
Book Description
This research investigates three issues related to the economic performance of oligopolistic markets where firms produce differentiated products and compete in prices. First of all, this dissertation uses a Markov Perfect Equilibrium approach with fixed periods of commitment of actions to answer the question of what prices a duopolists will charge in equilibrium if they produce horizontally differentiated products, move alternatingly, and compete in prices forever. It is found that firms charge prices which are higher than Nash equilibrium prices but lower than the fully collusive equilibrium prices. Also, contrasted with the Nash equilibrium of the one-shot constituent game, the firm having the significantly higher demand responsiveness to its own price always charges a lower price than the other firm does although it has higher marginal cost. The dissertation then proceeds to study whether a firm can overcome its cost disadvantage by upgrading its product over the rival's, and if so, whether there exists a profit-division which will induce the low cost firm and the high cost firm to collude and no one has an incentive to cheat. The results show that (1) the ability of upgrading the product over the rival's can allow a high cost firm to earn higher profit than a cost advantaged low cost firm; (2) there exists at least one profit-division which can sustain full collusion; and (3) in the collusive equilibrium firms enlarge their quality differences to alleviate the price tension between their products. Finally, this work investigates the welfare effect of mergers which occur in an oligopolistic industry where firms produce differentiated products. It is shown that for the merger to be socially beneficial, the number of the merging firms must be less than the total number of firms in the industry minus the ratio of the products' own elasticity to cross elasticity. The analysis indicates that the welfare effect of a merger of a specific size depends on the substitutability among products of the industry.
Three Essays on Pricing and Dynamic Control
Author: Hyun-soo Ahn
Publisher:
ISBN:
Category :
Languages : en
Pages : 320
Book Description
Publisher:
ISBN:
Category :
Languages : en
Pages : 320
Book Description
Journal of Economic Literature
Author:
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 398
Book Description
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 398
Book Description
Three Essays Applying Microeconomic Theory to International Trade Issues
Author: Nils Johan Bjorksten
Publisher:
ISBN:
Category : Equilibrium (Economics)
Languages : en
Pages : 202
Book Description
Publisher:
ISBN:
Category : Equilibrium (Economics)
Languages : en
Pages : 202
Book Description
Three Essays on Strategic Trading in Oligopolistic Economies
Author: Alexei Boulatov
Publisher:
ISBN:
Category :
Languages : en
Pages : 328
Book Description
Publisher:
ISBN:
Category :
Languages : en
Pages : 328
Book Description
Three Essays on Imperfect Competition in Agricultural Markets
Author: Mingxia Zhang
Publisher:
ISBN:
Category :
Languages : en
Pages : 402
Book Description
Publisher:
ISBN:
Category :
Languages : en
Pages : 402
Book Description
Three Essays on Antitrust and Innovation
Author: Donald Karl Stockdale
Publisher:
ISBN:
Category : Antitrust law
Languages : en
Pages : 288
Book Description
Publisher:
ISBN:
Category : Antitrust law
Languages : en
Pages : 288
Book Description
Three Essays on Strategic Aspects of International Trade
Author: Jee-Hyeong Park
Publisher:
ISBN:
Category :
Languages : en
Pages : 342
Book Description
Publisher:
ISBN:
Category :
Languages : en
Pages : 342
Book Description
Three Essays on Competition and Interactions
Author: Jaesoo Kim
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 212
Book Description
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 212
Book Description
Three Essays on Cost Reducing Investment
Author: Pedro Pereira
Publisher:
ISBN:
Category : Cost control
Languages : en
Pages : 242
Book Description
Publisher:
ISBN:
Category : Cost control
Languages : en
Pages : 242
Book Description