The "Average" Within-Sector Firm Heterogeneity in General Oligopolistic Equilibrium

MPRA Paper from University Library of Munich, Germany

Abstract: This paper builds a general oligopolistic equilibrium model to investigate how within-sector firm heterogeneities affect wage rate, country-wide profits, and welfare. Using linear inverse demands, I consider asymmetric sectors, each involving n Cournot oligopolists producing horizontally differentiated varieties with constant, though asymmetric, costs. I link a measure of the average within-sector firm heterogeneity with the economy-wide, endogenously determined, and competitive wage rate. For interior equilibriums, the higher the "average" the lower the wage rate. Once general equilibrium feedbacks from wage rate are considered, the "average" has an unclear impact on country-wide profits and welfare, depending on moments of the technology distribution as well as demand parameters. The findings have implications to better understand antitrust and related policies.

Keywords: Cournot Competition; General Oligopolistic Equilibrium (GOLE); Asymmetric Oligopoly; Horizontal Differentiation; Market Concentration; Antitrust (search for similar items in EconPapers)
JEL-codes: D43 D51 L11 L13 (search for similar items in EconPapers)
Date: 2012-07-21
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:40212

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