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Entry and consumer welfare in a differentiated Cournot oligopoly

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  • Chung, Hoe Sang

Abstract

This study investigates the effect of entry on consumer welfare in a Cournot oligopoly with differentiated products. Considering the entry of a firm that is less efficient than incumbents, I show that in contrast to the case of homogeneous products, entry is detrimental to consumers if the entrant is sufficiently inefficient.

Suggested Citation

  • Chung, Hoe Sang, 2023. "Entry and consumer welfare in a differentiated Cournot oligopoly," Economics Letters, Elsevier, vol. 231(C).
    • Handle: RePEc:eee:ecolet:v:231:y:2023:i:c:s0165176523003087
    DOI: 10.1016/j.econlet.2023.111283
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    References listed on IDEAS

    as
    1. Soumyananda Dinda & Arijit Mukherjee, 2014. "A Note on the Adverse Effect of Competition on Consumers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(1), pages 157-163, February.
    2. Rabah Amir & Val E. Lambson, 2000. "On the Effects of Entry in Cournot Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(2), pages 235-254.
    3. Lahiri, Sajal & Ono, Yoshiyasu, 1988. "Helping Minor Firms Reduces Welfare," Economic Journal, Royal Economic Society, vol. 98(393), pages 1199-1202, December.
    4. Seade, Jesus K, 1980. "On the Effects of Entry," Econometrica, Econometric Society, vol. 48(2), pages 479-489, March.
    5. Yongmin Chen & Michael H. Riordan, 2008. "Price‐increasing competition," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 1042-1058, December.
    6. Koji Okuguchi, 1973. "Quasi-Competitiveness and Cournot Oligopoly," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(1), pages 145-148.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Entry; Consumer welfare; Cournot oligopoly; Differentiated products;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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