Natural oligopolies and the gains from trade
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Natural oligopolies and the gains from trade

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Published by London School of Economics and Political Science in London .
Written in English


Book details:

Edition Notes

Statementby Avner Shaked and John Sutton.
SeriesTheoretical economics discussion paper series / International Centre for Economics and Related Disciplines -- 82/51
ContributionsSutton, John.
ID Numbers
Open LibraryOL13762109M

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Natural oligopolies and the gains from trade. By Avner Shaked and John Sutton. Topics: HD Industries. Land use. Labor. Publisher: Suntory and Toyota International Centres for Economics and Related Disciplines, London School of Economics and Political Science. Year: OAI identifier: oai: Author: Avner Shaked and John Sutton. Gains from Trade; Key Concepts and Summary; Oligopolies are typically characterized by mutual interdependence where various decisions such as output, price, advertising, and so on, depend on the decisions of the other firm(s). a natural monopoly will arise when the quantity demanded in a market is only large enough for a single firm to Author: Erik Dean, Justin Elardo, Mitch Green, Benjamin Wilson, Sebastian Berger. Clarke, Roger, and David R. Collie () ‘Product differentiation and the gains from trade under Bertrand duopoly’, Canadian Journal of Economics, 36, – CrossRef Google Scholar Collie, David R. () ‘Optimum welfare and maximum revenue tariffs under oligopoly’, Scottish Journal of Political Economy, 38, –Cited by: Oligopolies are typically characterized by mutual interdependence where various decisions such as output, price, advertising, and so on, depend on the decisions of the other firm(s). Analyzing the choices of oligopolistic firms about pricing and quantity produced involves considering the pros and cons of competition versus collusion at a given.

  The links between foreign ownership, trade policy, domestic market structure and technical changes that have been referred to as “x-efficiency” (Markusen, ; Markusen and Stähler, ) are not directly explored in this model, though efficiency gains from increased lengths of run (scale) in the presence of fixed costs are an important. James Friedman provides a thorough survey of oligopoly theory using numerical examples and careful verbal explanations to make the ideas clear and accessible. While the earlier ideas of Cournot, Hotelling, and Chamberlin are presented, the larger part of the book is devoted to the modern work on oligopoly that has resulted from the application of dynamic techniques and game theory to this area. A natural oligopoly behaves like a natural monopoly and exists as long as one firm does not become too competitive. This is done because it is more efficient for a small number of large firms to provide these services rather than a large number of small firms. See monopoly for the characteristics of a natural oligopoly. Efficiency Trade-off. Oligopolies form when several dominant companies rule over a particular market or industry, making collaboration and partnerships possible between the firms that exist within them. While an oligopolistic setup can be incredibly beneficial for companies already existing in the marketplace, they are equally as hard to break into for new companies.

How do oligopolies work? Below is a game theory example that models collusion in a two-firm oligopoly: Profits given as (Firm A, Firm B) It is important to note that in real-life oligopolies, the games (instances of collusion) are sequential; meaning that one firm’s behavior in one game may influence the game’s outcome in future periods. Summarizing, if oligopolies are strong, there is a tendency for workers to gain more from trade and the economy to gain less from trade than under per fect competition; capitalists tend to lose. If oligopolies are weak, workers, capitalists, and the economy gain about as much as with perfect competition.   The conditions that enable oligopolies to exist include high entry costs in and a platform that gains value with more customers (such as social media). The global tech and trade .   An oligopoly consists of a select few companies having significant influence over an industry. Industries like oil & gas, airline, mass media, auto, and telecom are all examples of oligopolies.