Welfare reductions from small cost reductions in differentiated oligopoly [An article from: International Journal of Industrial Organization]

This digital document is a journal article from International Journal of Industrial Organization, published by Elsevier in 2007. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.

Description:
This paper compares the welfare effects of cost reductions in differentiated Bertrand and Cournot oligopolies. Using a linear demand system, the paper provides the critical levels of output shares below which a small cost reduction by a Bertrand or Cournot firm reduces welfare. It then shows that the critical value is larger under Bertrand competition than Cournot competition.