nep-ind New Economics Papers
on Industrial Organization
Issue of 2009‒10‒03
two papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Cournot Oligopoly and Concavo-Concave Demand By Christian Ewerhart
  2. Distributive and Regional Effects of Monopoly Power By Urzúa, Carlos M.

  1. By: Christian Ewerhart
    Abstract: The N-firm Cournot model with general technologies is reviewed to derive generalized and unified conditions for existence of a pure strategy Nash equilibrium. Tight conditions are formulated alternatively (i) in terms of concavity of two-sided transforms of inverse demand, or (ii) as linear constraints on the elasticities of inverse demand and its first derivative. These conditions hold, in particular, if a firm’s marginal revenue decreases in other firms’ aggregate output, or if inverse demand is logconcave. The analysis relies on lattice-theoretic methods, engaging both cardinal and ordinal notions of supermodularity. As a byproduct, a powerful test for strict quasiconcavity is obtained.
    Keywords: Cournot competition, existence of Nash equilibrium, concavity of demand, supermodular games, strict quasiconcavity
    JEL: L13 C72 C62
    Date: 2009–09
  2. By: Urzúa, Carlos M. (Tecnológico de Monterrey, Campus Ciudad de México)
    Abstract: This paper estimates the distributive and regional effects of firms with market power in the case of Mexico. It presents evidence that the welfare losses due to the exercise of monopoly power are not only significant, but also regressive. Moreover, the losses are different for the urban and rural sectors, as well as for each of the states of Mexico, being the inhabitants of the poorest ones the most affected by firms with market power.
    Keywords: monopoly, Cournot oligopoly, distributive effects, regional effects, income distribution, goods markets, Mexico
    JEL: L10 L40 L66 I31 O14 R20
    Date: 2009–04

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