We consider a Cournot oligopoly market of firms possessing increasing returns to scale technologies (which may not be identical). It is shown that an external regulating agency can increase total social welfare without running a deficit by of ering to subsidize one firm an amount which depends...

We show that a welfare maximizing planner in a Cournot oligopoly can easily implement the socially optimal outcome by offering the firms a per unit subsidy in return for upfront fees. The planner announces a subsidy and auctions it off to a limited number of firms. It is shown that if at least...