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A Note on Cost-Reducing Alliances in Vertically Differentiated Oligopoly

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  • Frédéric DEROÏAN

    (FORUM)

Abstract

In a vertically differentiated oligopoly, firms raise cost-reducing alliances before competing with each other. It is shown that heterogeneity in quality and in cost functions reduces individual incentives to form links. Furthermore, both differentiated Cournot and Bertrand competition qualitatively similar incitations to form alliances.

Suggested Citation

  • Frédéric DEROÏAN, 2004. "A Note on Cost-Reducing Alliances in Vertically Differentiated Oligopoly," Economics Bulletin, AccessEcon, vol. 12(11), pages 1-6.
    • Handle: RePEc:ebl:ecbull:eb-04l10044
    as

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    References listed on IDEAS

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    1. Goyal, Sanjeev & Joshi, Sumit, 2003. "Networks of collaboration in oligopoly," Games and Economic Behavior, Elsevier, vol. 43(1), pages 57-85, April.
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    5. Symeonidis, George, 2003. "Quality heterogeneity and welfare," Economics Letters, Elsevier, vol. 78(1), pages 1-7, January.
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    More about this item

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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