Research output: Chapter in Book/Report/Conference proceeding › Conference contribution › Research › peer-review
Social Welfare under Oligopoly : Does the Strengthening of Competition in Production Increase Consumers' Well-Being? / Parenti, Mathieu; Sidorov, Alexander V.; Thisse, Jacques-Francois.
CONTRIBUTIONS TO GAME THEORY AND MANAGEMENT, VOL X. ed. / LA Petrosyan; NA Zenkevich. ST PETERSBURG UNIV GRAD SCH MANAGEMENT, 2017. p. 233-244 (Contributions to Game Theory and Management; Vol. 10).Research output: Chapter in Book/Report/Conference proceeding › Conference contribution › Research › peer-review
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TY - GEN
T1 - Social Welfare under Oligopoly
T2 - 10th International Conference on Game Theory and Management (GMT2016)
AU - Parenti, Mathieu
AU - Sidorov, Alexander V.
AU - Thisse, Jacques-Francois
PY - 2017
Y1 - 2017
N2 - The paper studies the detailed comparison of the Social welfare (indirect utility) under three types of imperfect competition in a general equilibrium model: quantity oligopoly (Cournot), price oligopoly (Bertrand) and monopolistic competition (Chamberlin). The folk wisdom implies that an increasing toughness of competition in sequence Cournot-Bertrand-Chamberlin results in increasing of consumers' welfare (indirect utility). We show that this is not true in general. This is accomplished in a simple general equilibrium model where consumers are endowed with separable preferences. We find the sufficient condition in terms of the representative consumer preference providing the "intuitive" behavior of the indirect utility and show that this condition satisfy the classes of utility functions, which are commonly used in examples (e.g., CES, CARA and HARA). Moreover, we provide a series of numerical examples (and analytically verifiable conditions as well), which illustrate that violation of this condition may results in "counter-intuitive" behavior of indirect utility, when the weakest level of competition (Cournot) provides the highest amount of the consumer's welfare.
AB - The paper studies the detailed comparison of the Social welfare (indirect utility) under three types of imperfect competition in a general equilibrium model: quantity oligopoly (Cournot), price oligopoly (Bertrand) and monopolistic competition (Chamberlin). The folk wisdom implies that an increasing toughness of competition in sequence Cournot-Bertrand-Chamberlin results in increasing of consumers' welfare (indirect utility). We show that this is not true in general. This is accomplished in a simple general equilibrium model where consumers are endowed with separable preferences. We find the sufficient condition in terms of the representative consumer preference providing the "intuitive" behavior of the indirect utility and show that this condition satisfy the classes of utility functions, which are commonly used in examples (e.g., CES, CARA and HARA). Moreover, we provide a series of numerical examples (and analytically verifiable conditions as well), which illustrate that violation of this condition may results in "counter-intuitive" behavior of indirect utility, when the weakest level of competition (Cournot) provides the highest amount of the consumer's welfare.
KW - Cournot competition
KW - Bertrand competition
KW - free entry
KW - Lerner index
KW - indirect utility
KW - MONOPOLISTIC COMPETITION
KW - COURNOT
M3 - Conference contribution
SN - *****************
T3 - Contributions to Game Theory and Management
SP - 233
EP - 244
BT - CONTRIBUTIONS TO GAME THEORY AND MANAGEMENT, VOL X
A2 - Petrosyan, LA
A2 - Zenkevich, NA
PB - ST PETERSBURG UNIV GRAD SCH MANAGEMENT
Y2 - 7 July 2016 through 9 July 2016
ER -
ID: 18736588