### Abstract

Original language | English |
---|---|

Place of Publication | Glasgow |

Publisher | University of Strathclyde |

Pages | 1-27 |

Number of pages | 28 |

Volume | 09 |

Publication status | Published - 9 Oct 2009 |

### Fingerprint

### Keywords

- quantity competition
- cournot
- strategic foundation
- commitment

### Cite this

*Bilateral Oligopoly and Quantity Competition*. (22 ed.) (pp. 1-27). Glasgow: University of Strathclyde.

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**Bilateral Oligopoly and Quantity Competition.** / Dickson, Alex; Hartley, Roger.

Research output: Working paper › Discussion paper

TY - UNPB

T1 - Bilateral Oligopoly and Quantity Competition

AU - Dickson, Alex

AU - Hartley, Roger

N1 - Published as a paper within the Discussion Papers in Economics, No. 09-22 (2009)

PY - 2009/10/9

Y1 - 2009/10/9

N2 - Bilateral oligopoly is a strategic market game with two commodities, allowing strategic behavior on both sides of the market. When the number of buyers is large, such a game approximates a game of quantity competition played by sellers. We present examples which show that this is not typically a Cournot game. Rather, we introduce an alternative game of quantity competition (the market share game) and, appealing to results in the literature on contests, show that this yields the same equilibria as the many-buyer limit of bilateral oligopoly, under standard assumptions on costs and preferences. We also show that the market share and Cournot games have the same equilibria if and only if the price elasticity of the latter is one. These results lead to necessary and sufficient conditions for the Cournot game to be a good approximation to bilateral oligopoly with many buyers and to an ordering of total output when they are not satisfied.

AB - Bilateral oligopoly is a strategic market game with two commodities, allowing strategic behavior on both sides of the market. When the number of buyers is large, such a game approximates a game of quantity competition played by sellers. We present examples which show that this is not typically a Cournot game. Rather, we introduce an alternative game of quantity competition (the market share game) and, appealing to results in the literature on contests, show that this yields the same equilibria as the many-buyer limit of bilateral oligopoly, under standard assumptions on costs and preferences. We also show that the market share and Cournot games have the same equilibria if and only if the price elasticity of the latter is one. These results lead to necessary and sufficient conditions for the Cournot game to be a good approximation to bilateral oligopoly with many buyers and to an ordering of total output when they are not satisfied.

KW - quantity competition

KW - cournot

KW - strategic foundation

KW - commitment

M3 - Discussion paper

VL - 09

SP - 1

EP - 27

BT - Bilateral Oligopoly and Quantity Competition

PB - University of Strathclyde

CY - Glasgow

ER -