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Small Leading Firms

Author

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  • JEFFREY T. La FRANCE
  • ANDREW SCHMITZ
  • DAVID ZILBERMAN

Abstract

We formally analyze the question of whether a price leader must control a large share of the market. Our main result is that if other producers have rising marginal costs and behave as price takers, even the smallest firm in a competitive industry with a rising supply curve can enhance its profits by cutting output and raising price, becoming a price leader. Therefore, we would expect pure competition to be destroyed under these technological conditions.

Suggested Citation

  • JEFFREY T. La FRANCE & ANDREW SCHMITZ & DAVID ZILBERMAN, 1984. "Small Leading Firms," The Economic Record, The Economic Society of Australia, vol. 60(2), pages 160-164, June.
    • Handle: RePEc:bla:ecorec:v:60:y:1984:i:2:p:160-164
    DOI: 10.1111/j.1475-4932.1984.tb00849.x
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    References listed on IDEAS

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    8. Pindyck, Robert S, 1978. "Gains to Producers from the Cartelization of Exhaustible Resources," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 238-251, May.
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