[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/a/oup/restud/v56y1989i2p217-234..html
   My bibliography  Save this article

Market Size and Substitutability in Imperfect Competition: A Bertrand-Edgeworth-Chamberlin Model

Author

Listed:
  • Jean-Pascal Benassy
Abstract
Competition is often associated with the idea that there are many traders in the market or that each price maker is small as compared to the market. This paper introduces this notion of market size in a model of price competition with imperfect substitutes by constructing a model which creates a bridge between the Chamberlin and Bertrand-Edge worth lines of work on price competition. We investigate the role of two fundamental parameters in the existence of an equilibrium: the market size, given by the number n of competitors, and the degree of substitutability. We prove that: (a) For a given number of n ≦ 2 of competitors, a sufficiently large but finite degree of substitutability entails nonexistence. This thus generalizes the Bertrand-Edgeworth nonexistence result, which applies only to perfect substitutes, (b) Conversely for a given upper bound on the degree of substitutability, a sufficiently large number of competitors ensures existence, which thus introduces a significant role for market size in models of imperfect competition. We finally investigate the proximity of an equilibrium (when it exists) to a "competitive outcome", and we find that both high substitutability and large market size are a condition for competitiveness.

Suggested Citation

  • Jean-Pascal Benassy, 1989. "Market Size and Substitutability in Imperfect Competition: A Bertrand-Edgeworth-Chamberlin Model," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(2), pages 217-234.
  • Handle: RePEc:oup:restud:v:56:y:1989:i:2:p:217-234.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.2307/2297458
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:restud:v:56:y:1989:i:2:p:217-234.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/restud .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.