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A note on competitive toughness: why it should be identified neither with product substitutability, nor (inversely) with concentration. Toward a unified theory of oligopoly

Author

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  • Saul DESIDERIO

    (Universita' Politecnica delle Marche, Dipartimento di Economia)

  • Davide DOTTORI

    (Universita' Politecnica delle Marche, Dipartimento di Economia)

Abstract

Often the intensity of competition has been measured through proxies like the degree of product substitutability or as the inverse of the degree of concentration in an industry. Both visions are based on the implicit assumption that few competitors imply a less though competition, but puzzles arise as several counter-examples exist. Other puzzling issues arise from the lack of a unified approach to oligopolistic equilibria (e.g. Cournot vs Bertrand competition). In this paper the unified approach of competitive toughness proposed by D'Aspremont et al.(2007), offering a generalization of the traditional oligopoly theory encompassing all the possible oligopolistic regimes between the Cournot and the competitive outcome, is discussed, also with respect to its implication for economic growth and macro studies.

Suggested Citation

  • Saul DESIDERIO & Davide DOTTORI, 2007. "A note on competitive toughness: why it should be identified neither with product substitutability, nor (inversely) with concentration. Toward a unified theory of oligopoly," Working Papers 301, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    • Handle: RePEc:anc:wpaper:301
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    References listed on IDEAS

    as
    1. d'Aspremont, Claude & Dos Santos Ferreira, Rodolphe, 2010. "Oligopolistic competition as a common agency game," Games and Economic Behavior, Elsevier, vol. 70(1), pages 21-33, September.
    2. D’ASPREMONT, Claude & DOS SANTOS FERREIRA, Rodolphe & GERARD-VARET, Louis-André, 2007. "Imperfect competition and the trade cycle: guidelines from the late thirties," LIDAM Discussion Papers CORE 2007079, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Ugo FRATESI, 2010. "The National and International Effects;of Regional Policy Choices: Agglomeration Economies, Peripherality and Territorial Characteristics," Working Papers 344, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    2. Fabio FIORILLO & Agnese SACCHI, 2010. "I Want to Free-ride. An Opportunistic View on Decentralization Versus Centralization Problem," Working Papers 346, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    3. Luca RICCETTI, 2011. "A Copula-GARCH Model for Macro Asset Allocation of a Portfolio with Commodities: an Out-of-Sample Analysis," Working Papers 355, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    4. Elena AMBROSETTI & Eralba CELA & Tineke FOKKEMA, 2011. "The Remittances Behaviour of the Second Generation in Europe: Altruism or Self-Interest?," Working Papers 368, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    5. Luca RICCETTI, 2010. "Minimum Tracking Error Volatility," Working Papers 340, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.

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