# Questions tagged [oligopoly]

Questions about markets where the number of sellers is finite and larger than one.

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### Characterization of profit functions arising from Cournot competitions

I would like to know what exactly are the functions of the form $$\pi(x, y) = P(x+y)x - C(x),$$ i.e., the profit functions arising from symmetric Cournot duopolies with inverse demand functions $P$ ...
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### Any papers on bertrand pricing and number of firms?

Under bertrand competition with n symmetric firms the price can be equal to marginal cost for finite repeated games but a collusive monopoly price can be sustained for infinitely repeated games. ...
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### "Cournot competition" with different prices for different firms

This operations research paper considers a "Cournot" competition modeled as follows. [E]ach [firm] $i$ incurs a cost $w$ in obtaining one unit of the product, sells $q_i$ units of the ...
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### Any classic micro models in which the (equilibrium) number of producers of a product increases monotonically with demand?

I want to build a model to capture the following thing: when there is higher demand for fish, this attract more producers to enter and produce fish and there will be a higher number of fish producers ...
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I have a leader who has to optimise quantity, x, inputting the quantity of follower, y. Problem is quantity equation of leader and follower are not separable. Leader's objective function is - $$\sqrt{... 0 votes 1 answer 78 views ### Stackelberg model with 3 symmetric firms Firm 1, the incumbent, sets quantity q1 first, then firm 2 enters the market and sets quantity q2, knowing q1. Lastly, firm 2 enters the market and sets quantity q3, knowing q1 and q2. Firms are ... • 21 0 votes 0 answers 23 views ### Long Run Model of Oligopolies After Recession I am currently investigating about the long run impact of the COVID 19 to the US airline industry. Is there any specific (long-run) model that I can use for oligopolies (for 4 main companies)? Because ... 1 vote 1 answer 119 views ### Underlying assumptions of Bertrand competition Q1. Under the lists of assumptions for Bertrand model it is mentioned in last that the following are intuitively deducible when considering the law of demand of firms' competition in the market: If ... • 37 1 vote 1 answer 119 views ### For which number of firms in a Cournot oligopily a merger is profitable Assume a Cournot oligopoly with N (equal to 2 or higher) symmetric firms. Firms face a demand function P=a-bQ and an average cost c. I need to find the number of firms N for which it will be ... • 21 1 vote 0 answers 44 views ### On Cournot question In a duopoly market, the market demand function is y(p) = 120-p where y=y_1+y_2 Total function of firm 1 is C_1(y_1)=20y_1 while the reaction function of firm 2 is y_2= 60-0.5y_1. Assume that ... • 182 2 votes 1 answer 61 views ### How do the assumptions p'+q_ip''<0 and p'-c''<0 ensure the stability of the Nash equilibrium among private firms in basic mixed oligopoly model? I have two quick question regarding basic oligopoly models: What is meant by we impose the assumptions to p'+q_ip''<0 and p'-c''<0 to ensure the stability of the Nash equilibrium among ... • 31 3 votes 0 answers 435 views ### How to solve the Bertrand model when marginal costs are different and not constant? Find the equilibrium in the Bertrand model with two firms, with total costs given by: TC_1(q_1) = \alpha q_{1}^2 TC_2(q_2) = \beta q_{2}^2 Inverse demand is given by P = A - Q, where Q = q_1 + ... • 2,259 1 vote 2 answers 280 views ### how does monopolisitic competition make profit in the long run in reality guys, I have this doubt that if the fast food industry such as KFC, and Maccas are examples of monopolistic competition how are they still making a profit? Because as per the model in long run the ... 3 votes 1 answer 110 views ### Cournot Duopoly firms guaranteed to produce the same amount If a market is given to be a Cuornot duopoly and Q = q1 + q2. What assumptions can you make about q1 and q2 being equal? Is it possible for q1 > q2 and thus for company 1 to have greater market ... • 133 3 votes 1 answer 146 views ### Math behind the first mover advantage in Stackelberg model Suppose the market demand is P(Q) = a-bQ and the manufacturing cost of an item is c_1q_1 for firm 1 and c_2q_2 for firm 2. In the Cournot model, we maximize the profit functions and plug in ... • 366 1 vote 1 answer 613 views ### Why is the Cournot equilibrium price more than competitive price? Why is the Cournot competition price more than the perfectly competitive price? My intuition tells me that since the quantity is less than what would've been the case in a perfect competition, so the ... • 366 0 votes 1 answer 43 views ### Doesn't it make sense in terms of economic security for tech companies to support unions? It seems to me looking across (modern) history that the biggest threat to monopoly is government intervention. It certainly seems true in present times when you have many politicians on the left ... • 103 0 votes 0 answers 43 views ### How useful are basic economics (elasticity / consumer & producer theory) in real life? I am thinking how these concepts will be applied in the industries / at a job. For example I could see elasticity as useful in projecting the outcomes of supply ... • 1 2 votes 1 answer 386 views ### Realistic examples of quantity competition In microeconomic models of oligopolies we consider price competition and quantity competition (think Cournot, Bertrand, Stackelberg). I can easily imagine price competition where a producer sets the ... • 2,385 21 votes 2 answers 6k views ### Why would a company sabotage its product's ability to be used for a particular purpose? I saw in the news recently that NVIDIA has placed limits on the hash rate for mining Ethereum cryptocurrency. This is purportedly to get more GPUs into the hands of gamers instead of crypto miners. ... • 385 1 vote 1 answer 592 views ### Profit maximization of an oligopolistic firm I have some serious doubts between A and B. On one hand, given that each oligopolistic firm follows the same profit maximization rule as that of a monopolistic one, it's the basic rule of MR = MC, and ... • 11 1 vote 1 answer 188 views ### Will there always be excess profit in the Cournot model equilibrium/monopoly So I'm studying market structures for the end of term, and I'm a bit confused about excess profits. From what I can see, excess profits occur when the demand curve intersects the AC curve - the MR=MC ... • 35 0 votes 0 answers 139 views ### Sequential and simultaneous price competition Frims 1 (leader) and 2 (follower) compete in price with product differentiation • Find the equilibrium price, quantity and profit when they choose price simultaneously and sequentially. q1=100-10p1+... 2 votes 1 answer 662 views ### Uniform price vs. pay-as-bid auctions in energy markets These two types of auctions are most commonly used in the energy trading markets. What would be advantages and disadvantages of each? And in the end, can we expect them to deliver similar outcome? One,... • 939 4 votes 1 answer 207 views ### Equilibrium with substitute goods I am attempting to solve the following problem The demand functions for two substitute goods, the production cost of which equals c_1 and c_2, are q_1 = a_1 + b_{11}p_1 + b_{12}p_2 and q_2 = ... • 141 1 vote 2 answers 141 views ### Why wouldn't other firms follow suit if an individual firm decides to cut its price? Why doesn't the demand curve an individual firm faces in a perfectly competitive market have the same elasticity as it does in a oligopolistic market? Under perfect competition, if a firm increases ... • 11 5 votes 2 answers 534 views ### Cournot oligopoly - first-order condition I am reading an article that has this description of the first-order condition for a Cournot n-firm game: Take P(Q) = Q^{-1}, \pi_i(q_i, Q) = (Q^{-1} - c_i)q_i. Then the first-order condition for ... • 153 3 votes 1 answer 592 views ### Duopoly vs Collusion (quadratic costs) Suppose there are 2 firms; Demand curve is given by P=1400 - 5(q_1+q_2) and cost function is given by C_i = 5q_i^2. For cournot, the best response function comes out to be q_i=70 - 0.25q_j ... • 31 3 votes 1 answer 160 views ### Perfect Bayesian Equilibrium in a two stage game with incomplete information I would like to solve a game where firms have private information about their own type, but only know the distribution of the other firm's type. They interact in two stages, where the strategies ... 1 vote 1 answer 92 views ### Is there any research, theory, or anything which shows how much of a market has to be in power of a few companies to be a force against free market? According to Free market a free market is a system in which the prices for goods and services are determined by the open market and by consumers. In a free market, the laws and forces of supply ... • 545 0 votes 1 answer 622 views ### Stackelberg Oligopoly 3 firms [closed] Imagine that there are 3 firms in a monopolistic market, F1, F2 and F3. Firms 1 and 2 are incumbent firms and act simultaneously whereas Firm 3 observes the actions of both firms before deciding ... 4 votes 2 answers 6k views ### Stackelberg with 3 firms I'm currently trying to solve the following problem: Stackelberg with 3 firms Imagine there are three firms on a monopolistically competitive market. The marginal cost of produc- tion in each ... • 313 2 votes 1 answer 1k views ### How do small firms survive in an oligopoly? How do small firms survive in an oligopoly if large firms already dominate a huge amount of market share in the market? in terms of the supermarket industry between large supermarkets and small ... 1 vote 1 answer 114 views ### Supermarkets industry market structure If the industry is dominated by a few major large retailers like Walmart and target with thousands of many other small supermarkets around the country, what is the market structure of the industry? is ... 1 vote 1 answer 567 views ### Non Collusive Cournot Duopoly model with two firms, zero costs and linear demand curve I am reading Modern Microeconomics by Koutsoyiannis. In a Non Collusive Cournot Duopoly model with two firms, zero costs and linear demand curve. Firm A produces half the total market demand to ... 1 vote 0 answers 729 views ### Will the market for driverless cars move toward a monopoly? There is a short article in The Economist (link below) where the writer makes the claim that because there are firms the exhibit economies of scale - in driverless technology - they will eventually ... • 165 0 votes 1 answer 3k views ### 3 Firm Stackelberg's Oligopoly Game Consider a market in which there are three firms, all producing the same good. Firm i's cost of producing qi units of the good is Ci(qi)=0 for qi≥0 for each i∈{1,2,3}; the price at which output is ... • 401 0 votes 1 answer 822 views ### Finding the demand function [closed] Here is the problem: Suppose that an oligopolist charges a price of 500 and sells 200 units of output per day. If the oligopolist increases its price about 500, quantity demanded will decline by 4 ... • 11 0 votes 1 answer 463 views ### Question on oligopoly. Consider an oligopoly between two identical firms producing a homogenous good with constant marginal cost where firms face linear market demand. B_i(q_j) denotes firm i’s best response given the ... • 182 1 vote 1 answer 370 views ### Intuition behind a cournot duopoly nash equilibrium producing a higher output than a monopoly? I am just wondering if someone could explain the descriptive, not mathematical intuition behind why a cournot equilibrium for a duopoly produces a higher level of output than a monopolist but lower ... • 11 2 votes 1 answer 153 views ### How exactly is a Bertrand equilibrium defined? By 'given the price set by other firm' does this mean the firm knows its competitor's exact output? I had read 3 textbooks, but one describes that they have a precise expectation of what their ... • 35 0 votes 1 answer 64 views ### Game Theory of Two Firms There are only two firms that produce and sell hockey equipment, Abel Corporation (A) and Baker Company (B). They each sponsor special events to try to gain customers. As there are only 2 firms, the ... • 13 4 votes 2 answers 64 views ### Firm Concentration and Low Inflation Inflation in the advanced economies since the financial crisis has been surprisingly low. Yet at the same time we’re told that the US economy is losing its dynamism in recent decades. This is ... • 101 3 votes 2 answers 1k views ### How does market work when there are few buyers and few sellers at the same market? If I understand it right, correct term for such situation is bilateral oligopoly. • 1,135 1 vote 2 answers 15k views ### Is the global Automobile Industry changing from an oligopoly to monopolistic competition? The current situation is the automobile industry is an oligopoly as there are few big firms and massive barriers to entry due to cost. However, The industry seems like it is changing to a monopolist ... • 11 2 votes 2 answers 129 views ### Studying Oligopolies I am a very Macro guy, but I need to dive a little in the world of Microeconomics. Specifically, I need to study oligopolies. From the general theory to empirics. Since I do not know the literature, I ... 2 votes 1 answer 2k views ### Oligopoly kinked demand graph doesn't make a sense to me Hello, so in class I learned about the kinked demand curve in oligopoly. Our teacher said that under the sticky price, the demand is inelastic. However, I don't understand how the demand can be ... 3 votes 2 answers 2k views ### Are market structures on a spectrum? So I understand that each market structure has their own characteristics, and that for instance Perfect Competition involves high competition, and I believe Monopolistic competition slightly less so, ... • 181 2 votes 1 answer 76 views ### Price when both supply and demand have market power I have an intermediate sector that operates using labor only. There is 1-1 pairs between firms and workers, with profits$$\pi = (Ap - w)\cdot 1 $p$ is the price, $A$ productivity, $w$ wage. ...
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I have given 2 firms in a market with constant marginal costs and no fixed costs market demand has $D(p)$ The ﬁrms play a Cournot game I'm supposed to Calculate the equilibrium quantity for each ...