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Tougher Price-Competition or Lower Concentration : A Trade-Off for Antitrust Authorities ?

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  • d ASPREMONT , Claude

    (CORE, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium)

  • MOTTA , Massimo

    (Universitat Pompeu Fabra, Barcelona)

Abstract

In a horizontal product differentiation model, we show conditions under which Cournot competition (which implies some form of price coordination) allows a larger number of firms to operate in the industry than Bertrand competition. In turn, total welfare is higher under Cournot than under Bertrand. This suggests that if antitrust authorities try to impose "too much" price competition in an industry, an increase in concentration may follow which is not necessarily beneficial to the collectivity.

Suggested Citation

  • d ASPREMONT , Claude & MOTTA , Massimo, 1994. "Tougher Price-Competition or Lower Concentration : A Trade-Off for Antitrust Authorities ?," LIDAM Discussion Papers CORE 1994015, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:1994015
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp1994.html
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    Cited by:

    1. Gilbert E. Metcalf & George Norman, 2002. "Oligopoly Deregulation in General Equilibrium: A Tax Neutralization Result," Discussion Papers Series, Department of Economics, Tufts University 0210, Department of Economics, Tufts University.
    2. Claude D'Aspremont & Rodolphe Dos Santos Ferreira & Louis‐André Gérard‐Varet, 2010. "Strategic R&D investment, competitive toughness and growth," International Journal of Economic Theory, The International Society for Economic Theory, vol. 6(3), pages 273-295, September.
    3. Steinmetz, Sebastien, 1998. "Spatial preemption with finitely lived equipments," International Journal of Industrial Organization, Elsevier, vol. 16(2), pages 253-270, March.

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