nep-ind New Economics Papers
on Industrial Organization
Issue of 2017‒04‒09
two papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. On the Coalitional Stability of Monopoly Power in Differentiated Bertrand and Cournot Oligopolies By Aymeric Lardon
  2. Homing choice and platform pricing strategy By Shekhar, Shiva

  1. By: Aymeric Lardon (Université Côte d'Azur, France; GREDEG CNRS)
    Abstract: In this article we revisit the classic comparison between Bertrand and Cournot competition in the presence of a cartel of firms that faces outsiders acting individually. This competition setting enables to deal with both non-cooperative and cooperative oligopoly games. We concentrate on industries consisting of symmetrically differentiated products where firms operate at a constant and identical marginal cost. First, while the standard Bertrand-Cournot rankings still hold for Nash equilibrium prices, we show that the results may be altered for Nash equilibrium quantities and profits.Second, we define cooperative Bertrand and Cournot oligopoly games with transferable utility on the basis of their non-cooperative foundation. We establish that the core of a cooperative Cournot oligopoly game is strictly included in the core of a cooperative Bertrand oligopoly game when the number of firms is lower or equal to 25. Otherwise the cores cannot be compared. Moreover, we focus on the aggregate-monotonic core, a subset of the core, that has the advantage to select point solutions satisfying both core selection and aggregate monotonicity properties. We succeed in comparing the aggregate-monotonic cores between Bertrand and Cournot competition regardless of the number of firms.
    Keywords: Bertrand, Cournot, Differentiated oligopoly, Cartel, Nash equilibrium, Core, Aggregate-monotonic core
    JEL: C71 D43
    Date: 2017–03
    URL: http://d.repec.org/n?u=RePEc:gre:wpaper:2017-10&r=ind
  2. By: Shekhar, Shiva
    Abstract: We compare a discriminatory pricing regime with a non-discriminatory regime in a competitive bottleneck model where content providers endogenously sort into single or multi-homers. We find that consumer prices rise when the share of single-homers increases in the non-discriminatory case, while they stay constant in the discriminatory pricing regime. A discriminatory pricing regime leads to higher platform profits than the non-discriminatory regime when the share of single-homers are relatively high. When the share of single-homers is relatively high (low), the discriminatory pricing regime leads to higher (lower) consumer surplus and social welfare when compared with the non-discriminatory regime.
    Keywords: price discrimination,two-sided markets,platforms,platform competition,network effects
    JEL: D43 L14 L82 L13
    Date: 2017
    URL: http://d.repec.org/n?u=RePEc:zbw:dicedp:247&r=ind

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