Contestability and the Indeterminacy of Free Entry Equilibria.

This note illustrates the fact that the number of active firms in free entry equilibrium may be largely indeterminate and different levels of positive profits may in many cases be sustained. This is shown to be true, in spite of market contestability, either under Cournot competition or under product differentiation. Examples are given for both cases. Appropriate conditions of increasing returns are required.

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Year of publication:	1996
Authors:	D'Aspremont, C. ; Dos Santos Ferreira, R. ; Gerard-Varet, L.A.
Institutions:	Groupement de Recherche en Économie Quantitative d'Aix-Marseille (GREQAM), Aix-Marseille School of Economics (AMSE)
Subject:	OLIGOPOLIES \| GENERAL EQUILIBRIUM

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Series:	G.R.E.Q.A.M..
Type of publication:	Book / Working Paper
Notes:	21 pages
Classification:	D40 - Market Structure and Pricing. General ; D43 - Oligopoly and Other Forms of Market Imperfection ; D50 - General Equilibrium and Disequilibrium. General
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005779607