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Free entry in successive oligopolies
Author(s) -
Gabszewicz Jean J.,
Zanaj Skerdilajda
Publication year - 2011
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/j.1742-7363.2011.00157.x
Subject(s) - oligopoly , downstream (manufacturing) , free entry , economics , upstream (networking) , convergence (economics) , upstream and downstream (dna) , microeconomics , marginal cost , cournot competition , computer science , operations management , macroeconomics , computer network
In the present paper, we propose an extension of Spengler's (1950) analysis of successive oligopolies, to study the effects of entry in the downstream and upstream markets. Free entry is analyzed using replica economies à la Debreu and Scarf (1963). We find that free entry may have different effects in the upstream and in the downstream market. Namely, the usual convergence of the price to the corresponding marginal cost only occurs in the downstream market.