"Advances in market theory and international trade".Presentation by Rodolphe Dos Santos Ferreira "Oligopolistic competition with varying competitive aggressiveness".
On September 11, 2012 had continued a series of international research seminars "Advances in market theory and international trade" with a report of Rodolphe Dos Santos Ferreira "Oligopolistic competition with free entry".
On September 11, 2012, Tuesday, 12:00-14:00.
Public Research Seminar.
Rodolphe Dos Santos Ferreira (BETA, Strasbourg University). «Oligopolistic competition with free entry».
Free entry equilibria are usually characterized by the zero profit condition. The idea that positive profits necessarily induce entry is based on the implicit assumption that potential entrants can perfectly reproduce the operating and marketing conditions of successful incumbents, which is true only as long as the entrants’ scales remain insignificant with respect to market size, a situation by definition excluded in the context of oligopolistic competition. The talk presents a synthesis of several papers co-signed by the speaker, where entry is part of a decision involving positive production, as opposed to a decision to have a nil production, that is, to remain inactive. Free entry equilibria are then just standard Nash equilibria of a one-stage oligopolistic game, which may encompass the main standard regimes of competition used in macroeconomic modeling: Cournot competition as well as price competition either in a Dixit-Stiglitz non-address setting or in a Salop spatial one. Such equilibria are typically indeterminate (leading to an interval of admissible values of the number of active firms that may contain several integers), and typically entail positive profits. A taxation/subsidization policy which would eliminate all but one equilibrium, the desired one from a social welfare viewpoint, while remaining inactive (hence non-distortive) at this equilibrium, is also suggested.
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The seminar was held at: Room 205, 10th Line VO.
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