If the firm holds a certain market power (Lerner index is positive), then the company's market presence generates a welfare loss. On the one hand, this loss is due to the contraction in demand as a result of practicing a higher price than the competitive price because the higher price...

When is the modeller introducing more error when analysing a Cournot market with private cost information - when ignoring market power or when ignoring the impact of incomplete information? Is the welfare loss at the market outcome driven by private information or by market power? The answer,...