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Do Other Firms Matter in Oligopolies?

Author

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  • J.E. Haskel
  • P. Scaramozzino

Abstract

This paper examines how firms interact with their rivals. The main novelty of our approach is that we let conjectural variations depend on the actual ability of other firms to react, which we measure by both the physical capacity and financial status of firms. Our main findings are threefold. First, in general, spare physical capacity leads rival firms to conjecture more aggressive behaviour. Second, financial variables have a complex effect on conjectures. We interpret this as due to signalling effects being more important in some industries, and financial distress in others. Third, leader-follower interactions appear to be relevant in all of the industries considered.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • J.E. Haskel & P. Scaramozzino, 1994. "Do Other Firms Matter in Oligopolies?," Working Papers 328, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:328
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    Cited by:

    1. Sophocles N. Brissimis & Theodora S. Kosma, 2006. "Market Conduct, Price Interdependence and Exchange Rate Pass-Through," Working Papers 51, Bank of Greece.
    2. Rafaelita M. Aldaba, 2008. "Can Imports Discipline Collusive Firms? Case of the Philippine Cement Industry," Microeconomics Working Papers 22608, East Asian Bureau of Economic Research.
    3. P. Geroski, 1998. "An Applied Econometrician's View of Large Company Performance," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 13(3), pages 271-294, June.
    4. Isayenko Oleksiy & Maryanchyk Ivan, 2006. "Market power in oligopoly: The case of the Ukrainian cement industry," EERC Working Paper Series 06-06e, EERC Research Network, Russia and CIS.
    5. Aune, Finn Roar & Mohn, Klaus & Osmundsen, Petter & Rosendahl, Knut Einar, 2010. "Financial market pressure, tacit collusion and oil price formation," Energy Economics, Elsevier, vol. 32(2), pages 389-398, March.
    6. Steven Pilloff, 1999. "Does the Presence of Big Banks Influence Competition in Local Markets?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 15(3), pages 159-177, May.
    7. repec:phd:pjdevt:pjd_2008_vol__xxxv_no__1-a is not listed on IDEAS
    8. Yamawaki, Hideki, 2002. "Price reactions to new competition: A study of US luxury car market, 1986-1997," International Journal of Industrial Organization, Elsevier, vol. 20(1), pages 19-39, January.
    9. Vo, Hong & Trinh, Quoc-Dat & Le, Minh & Nguyen, Thuy-Ngan, 2021. "Does economic policy uncertainty affect investment sensitivity to peer stock prices?," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 685-699.
    10. Campello, Murillo, 2006. "Debt financing: Does it boost or hurt firm performance in product markets?," Journal of Financial Economics, Elsevier, vol. 82(1), pages 135-172, October.

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables
    • L73 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Forest Products

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