Bilateral Oligopoly and Quantity Competition

Dickson, Alex and Hartley, Roger (2009) Bilateral Oligopoly and Quantity Competition. Discussion paper. University of Strathclyde, Glasgow.

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Abstract

Bilateral oligopoly is a strategic market game with two commodities, allowing strategic behavior on both sides of the market. When the number of buyers is large, such a game approximates a game of quantity competition played by sellers. We present examples which show that this is not typically a Cournot game. Rather, we introduce an alternative game of quantity competition (the market share game) and, appealing to results in the literature on contests, show that this yields the same equilibria as the many-buyer limit of bilateral oligopoly, under standard assumptions on costs and preferences. We also show that the market share and Cournot games have the same equilibria if and only if the price elasticity of the latter is one. These results lead to necessary and sufficient conditions for the Cournot game to be a good approximation to bilateral oligopoly with many buyers and to an ordering of total output when they are not satisfied.

ORCID iDs

Dickson, Alex ORCID logoORCID: https://orcid.org/0000-0001-9386-9036 and Hartley, Roger;
  • Item type:Monograph(Discussion paper)
    ID code:15292
    Dates:
    Date
    Event
    9 October 2009
    Published
    Notes:Published as a paper within the Discussion Papers in Economics, No. 09-22 (2009)
    Subjects:Social Sciences > Economic Theory
    Department:Strathclyde Business School > Economics
    Depositing user: Mrs Kirsty Fontanella
    Date deposited:08 Jan 2010 15:02
    Last modified:11 Nov 2024 16:02
    Related URLs:
    URI:https://strathprints.strath.ac.uk/id/eprint/15292
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