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Competition within and Between Groups of Firms

In: The Economics of Competition, Collusion and In-between

Author

Listed:
  • Claude d’Aspremont

    (Université Catholique de Louvain)

  • Rodolphe Santos Ferreira

    (Université de Strasbourg)

Abstract

In this chapter, we subdivide the oligopolistic sector into several separable groups and adapt our concept of oligopolistic equilibrium by simplifying accordingly both the market share and the market size constraints. In the following we introduce another path to further simplify firms’ conjectures: each firm anticipates the income to be spent in its group as if all groups were independent. Then, we further exploit the subdivision into groups by restricting our analysis to the limit case where perfect substitutability holds within each group. Assuming Cournot competition within each group leads to the concept of Cournotian monopolistic competition equilibrium. Through an example and a simple existence proposition, we show that this concept is less demanding than the Cournot-Walras equilibrium concept. In the last section, we present an empirical application to an industry divided into two groups, a dominant group and a competitive fringe, and, finally, examine in a theoretical example the limit of collusion.

Suggested Citation

  • Claude d’Aspremont & Rodolphe Santos Ferreira, 2021. "Competition within and Between Groups of Firms," Springer Books, in: The Economics of Competition, Collusion and In-between, chapter 0, pages 79-113, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-63602-9_3
    DOI: 10.1007/978-3-030-63602-9_3
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