Warianty tytułu
On Comparative Statics for Oligopoly
Języki publikacji
Abstrakty
W pracy tej analizowane będzie zachowanie się gałęzi przemysłu mających strukturę oligopolistyczną. Oligopol, w którym kilka firm rywalizuje na tym samym rynku, jest niewątpliwie najbardziej popularną w praktyce formą organizacji przemysłu. Każda z firm, podejmując decyzje dotyczące wielkości produkcji lub cen wytwarzanych przez siebie produktów, musi w nim brać pod uwagę decyzje konkurentów. Ma się więc tu do czynienia z interakcją strategiczną. Teorią, która najlepiej modeluje interakcję strategiczną, jest teoria gier. W tej pracy zostanie wykorzystanych wiele koncepcji teorii gier, przede wszystkim koncepcja równowagi Nasha. (fragment tekstu)
In this book we study comparative statics in oligopoly, our main interest is focused on multimarket oligopoly. In such a oligopoly firms compete on more than one market andór produce more than one good. The key concepts in our analysis are strategic substitutability and strategic complementarity. Both were introduced by Bulow, Geneakoplos and Klemperer (1985) and describe the strategic interaction between oligopolists. Strategic substitutability occurs when it is in a firm's interest to react to a more aggressive strategy of a competitor with a less aggressive strategy. Strategic substitutability can be also described by a downward sloping reaction function. Conversely, when it is in a firm's interest to react to an "aggressive" policy with an aggressive policy too (an increase of sales in response to an increase of sales for example), this is called strategic complementarity. Strategic complementarity occurs when the reaction function is upward sloping.
Chapter 1 contains basic information about oligopolies which are useful in further analysis. We describe Cournot duopoly, Bertrand duopoly and Bertrand duopoly with differentiated products.
Chapter 2 presents two new methods of comparative statics for a multimarket oligopoly. We use two approaches: the theory of supermodular games and matrix theory. Supermodular games can be intuitively described as the games with strategic complementarities. We show that if an oligopolistic game is the supermodular game, then we can obtain useful comparative statics result. The matrix approach is based on Metzler matrices, which are defined as quadratic matrices with nonnegative elements out of the main diagonal and negative elements on the main diagonal. We show that if a multimarket oligopoly is stable and if the matrix of second-order derivatives can be, after some operations, described as Metzler matrix, then the comparative statics analysis becomes straightforward.
In chapter 3 we use the results from chapter 2 to analyze the effects of an exogenous change in the exchange rate on prices in the framework of a two-country, two-commodity duopoly model with differentiated goods. We analyze Cournot (quantity) and Bertrand (price) competition. We show that in both models the kind of reaction to an exogenous change of the exchange rate depends crucially on strategic interaction between firms (described by strategic complementarity or substitutability) and on technology used in production (described by economies of scale). In particular, we show that, in Bertrand model, strategic substitutability and economies of scale in both countries lead to the following reaction: firm located in the country whose currency depreciates, decreases prices in both countries. Analogously, firm located in the country whose currency appreciates, increases prices in both countries.
In chapter 4 we analyze the effect of a devaluation of the domestic currency on the behaviour of a labour-managed firm which sells in both domestic and foreign markets and faces competition only in the foreign market. It is very well known that a labour-managed firm, which maximizes profit per worker, reacts to an increase of demand by cutting output and employment. However, we show that if the labour-managed firm sells on domestic and foreign markets and has high revenues from the domestic market, it will sell less at home and more abroad after the devaluation, thus reacting in the same way as a profit-maximizer. An analogous reaction occurs when the multimarket labour- managed firm receives a small export subsidy. We therefore extend and reverse the results of Mai к Hwang (1989) and Okuguchi (1991).
In chapter 5 we examine the welfare effects of various kinds of privatization in an oligopoly with one state firm and many private firms. We assume that the state firm maximizes profit per worker and has significantly bigger capital than any private one. Using numerical simulations we show that the partial privatization of the state firm is generally socially preferable to total privatization. This surprising result contradicts the result of Delbono (1992) who showed that total privatization of labour-managed monopoly is socially superior to a partial one. (original abstract)
Chapter 1 contains basic information about oligopolies which are useful in further analysis. We describe Cournot duopoly, Bertrand duopoly and Bertrand duopoly with differentiated products.
Chapter 2 presents two new methods of comparative statics for a multimarket oligopoly. We use two approaches: the theory of supermodular games and matrix theory. Supermodular games can be intuitively described as the games with strategic complementarities. We show that if an oligopolistic game is the supermodular game, then we can obtain useful comparative statics result. The matrix approach is based on Metzler matrices, which are defined as quadratic matrices with nonnegative elements out of the main diagonal and negative elements on the main diagonal. We show that if a multimarket oligopoly is stable and if the matrix of second-order derivatives can be, after some operations, described as Metzler matrix, then the comparative statics analysis becomes straightforward.
In chapter 3 we use the results from chapter 2 to analyze the effects of an exogenous change in the exchange rate on prices in the framework of a two-country, two-commodity duopoly model with differentiated goods. We analyze Cournot (quantity) and Bertrand (price) competition. We show that in both models the kind of reaction to an exogenous change of the exchange rate depends crucially on strategic interaction between firms (described by strategic complementarity or substitutability) and on technology used in production (described by economies of scale). In particular, we show that, in Bertrand model, strategic substitutability and economies of scale in both countries lead to the following reaction: firm located in the country whose currency depreciates, decreases prices in both countries. Analogously, firm located in the country whose currency appreciates, increases prices in both countries.
In chapter 4 we analyze the effect of a devaluation of the domestic currency on the behaviour of a labour-managed firm which sells in both domestic and foreign markets and faces competition only in the foreign market. It is very well known that a labour-managed firm, which maximizes profit per worker, reacts to an increase of demand by cutting output and employment. However, we show that if the labour-managed firm sells on domestic and foreign markets and has high revenues from the domestic market, it will sell less at home and more abroad after the devaluation, thus reacting in the same way as a profit-maximizer. An analogous reaction occurs when the multimarket labour- managed firm receives a small export subsidy. We therefore extend and reverse the results of Mai к Hwang (1989) and Okuguchi (1991).
In chapter 5 we examine the welfare effects of various kinds of privatization in an oligopoly with one state firm and many private firms. We assume that the state firm maximizes profit per worker and has significantly bigger capital than any private one. Using numerical simulations we show that the partial privatization of the state firm is generally socially preferable to total privatization. This surprising result contradicts the result of Delbono (1992) who showed that total privatization of labour-managed monopoly is socially superior to a partial one. (original abstract)
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Bibliografia
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