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While taking Industrial Organization I remember working with: Strategies and games: theory and practice by Dutta Introduction to industrial organization by Cabral Industrial organization: theory and applications by Shy Industrial Organization: Markets and Strategies by Belleflamme and Peitz The first two are rather introductory while third and forth are ...


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One interpretation I can offer. The demand function can be expressed as: $$Q_1 = Q_1(p_1,p_2)$$ Let us take the total differential: $$dQ_1 = \frac{\partial Q_1(p_1,p_2)}{\partial p_1}dp_1+\frac{\partial Q_1(p_1,p_2)}{\partial p_2}dp_2$$ Assume that $Q_1$ remains unchanged with respect to a change in prices. This implies that $dQ_1=0$. Solving the ...


4

Why not using the number of workers? And simply replacing sales (or output) by workers in the HHI or C4 indices. I saw this in the literature, but where? May be in a report of the German "Monopolkomission"... EDIT: I found an example for France. The share $C_{10}$ of the production of the 10 biggest firms is very correlated with their share in total ...


4

Here is a fact sheet by the OECD about the effects of competition. It is mostly concerned with growth and productivity, but also discusses the effects on poor consumers and prices. It cites a wide range of empirical studies that you might find of interest. https://www.oecd.org/daf/competition/2014-competition-factsheet-for-print-en.pdf OECD, Factsheet on ...


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Your conjecture seems to be contradicted, at least for small values of $\sigma$. You can draw the function with the following R-code: qq_f = function(x,k,h,sig){ -pnorm(-k, sd=sig)*( (dnorm(h*(1-x), sd=sig))^2 ) - 0.5*dnorm(-k^2, sd=sig)*( 2*pnorm(h*(1-x), sd=sig) -1 )^2 } curve(qq_f(x,k=0,h=1,sig=0.5),col='blue',xlim=c(-1,3),type='l',main="A ...


3

I would recommend the The theory of Industrial Organization and the Game Theory from Jean Tirole


3

Here is a counterexample (i.e. an example showing that the given statement is false). Assumptions: The cost of producing each unit of the good is \$1. All consumers are exactly identical, with each consumer willing to pay up to \$10 for one unit of the good. (Also, each consumer is willing to pay at most \$0 for a second unit of the good.) Market 1 has 200 ...


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I think standard in Bertrand competition with different constant marginal cost is another assumption in case of equal prices. Instead of sharing demand equally, you could assume that in case of equal prices the more efficient firms supplies the entire demand. As a result, all price pairs $p_1=p_2=p$ with $p \in [c_1,c_2]$ constitute an equilibrium. All ...


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The article Quality of Information and Oligopolistic Price Discrimination by Liu and Serfes covers this topic in great detail. It also has a rather nice literature review.


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Both of them are consistent. The economic profit is the total revenue $TR$ minus total cost $TC$ but in economics costs must include also opportunity costs not just accounting ones. However, for all standard market structures $TR>TC$ happens only if the marginal revenue or price $P$ is above marginal costs $MC$. Also if there is positive economic ...


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For a slightly different perspective and somewhat newer tools, I would suggest "Oligopoly Pricing: Old Ideas and New Tools" by Xavier Vives.


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Just looking at the setup, everything is symmetric. This means that if they were to move simultaneously then we should have $p_1 = p_2$, and the payoffs for the two firms the same. According to your calculation, $(p^*_1,p^*_2)=(\frac{a}{2},\frac{a}{4})$. Since $Q_1 = Q_2 \Rightarrow \pi_1 > \pi_2$. So it's quite clear that in this case, the first mover ...


1

The problem formulation admits the following Normal Form representation. We can reject any strategy involving price greater than 2, as demand falls to zero and such strategies are strictly dominated by those for which prices are either 1 or 2. 0 1 2 0 [0,0] [0,0] [0,0] 1 [0,0] [0.5,0.5] [1,0] 2 [0,0] [0,1] [1,1]...


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You are right that you first have to find F3's best-response function. F1 and F2 take as given this reaction of F3 to whatever they produce. Hence, you plug this best-response function into the incumbents' profit maximization problem. In that way, you take care of the fact that the incumbents anticipate F3's reaction, indirectly determining $q_3$. You ...


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Start with the second stage, this is just Cournot competition between firm 2 and firm 3. You can solve this for the Nash equilibrium by setting the first order condition for firm 2 and firm 3 and solving these two equations, taking $q_1$ as given. This will give you quantities $q_2$ and $q_3$ in terms of $q_1$ which you can then plug into the profit function ...


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If a market has free entry, then profit will tend to zero in the long run. Monopolistic competition and perfect competition are both characterized by zero long-run profit. Of course a firm would prefer to enter a market in which long run profits can be earned, but such markets are characterized by barriers to entry. To better understand this, consider a ...


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The division of the economy into sectors is arbitrary, meaning there is no universally accepted division of the economy. It is contextually dependent.


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