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Endogenous number of firms, horizontal concentration and heterogeneity of firms—A note

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  • Münter, Markus Thomas

Abstract

We re-examine implications of heterogeneity of firms under a Cournot setting on free entry equilibria concerning the number of firms. Heterogeneity reduces the number of firms in equilibrium—the larger the cost asymmetries, the smaller the free entry equilibrium number of firms in an industry.

Suggested Citation

  • Münter, Markus Thomas, 2017. "Endogenous number of firms, horizontal concentration and heterogeneity of firms—A note," Economics Letters, Elsevier, vol. 154(C), pages 74-76.
    • Handle: RePEc:eee:ecolet:v:154:y:2017:i:c:p:74-76
    DOI: 10.1016/j.econlet.2017.02.034
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    References listed on IDEAS

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    1. G. Urga & P. A. Geroski & S. Lazarova & C. F. Walters, 2003. "Are differences in firm size transitory or permanent?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 47-59.
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    6. Theodore C. Bergstrom & Hal R. Varian, 1985. "When Are Nash Equilibria Independent of the Distribution of Agents' Characteristics?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(4), pages 715-718.
    7. Corchón, Luis C., 2008. "Welfare losses under Cournot competition," International Journal of Industrial Organization, Elsevier, vol. 26(5), pages 1120-1131, September.
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    More about this item

    Keywords

    Endogenous market structure; Heterogeneity; Number of firms; Size distribution of firms; ​Cournot–Nash-equilibria;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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