Free Entry and Social Efficiency under Vertical Oligopoly

Ghosh, Arghya; Morita, Hodaka

doi:10.2139/ssrn.632941

Cited by 33 publications

(57 citation statements)

References 15 publications

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“…Our analysis is primarily related to contributions which consider the excess entry prediction in the presence of input market imperfections, mainly focusing on non-labor inputs (Okuno-Fujiwara and Suzumura, 1993, Ghosh and Morita, 2007a,b, Basak and Mukherjee, 2016. Labor as input has rarely been looked at and if so, the focus has been on trade unions (de Pinto andGoerke, 2016, Marjit andMukherjee, 2013) and profit-sharing (Suzumura, 1995, Chap.…”

Section: Introductionmentioning

confidence: 99%

Efficiency Wages in Cournot-Oligopoly

Pinto

Goerke

2019

The B.E. Journal of Economic Analysis &Amp; Policy

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In a Cournot-oligopoly with free but costly entry and business stealing, output per firm is too low and the number of competitors excessive, assuming labor productivity to depend on the number of employees only or to be constant. However, a firm can raise the productivity of its workforce by paying higher wages. We show that such efficiency wages accentuate the distortions occurring in oligopoly. Specifically, excessive entry is aggravated and the welfare loss due to market power rises.

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Section: Introductionmentioning

confidence: 99%

Efficiency Wages in Cournot-Oligopoly

Pinto

Goerke

2019

The B.E. Journal of Economic Analysis &Amp; Policy

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“…Hence, unlike the present paper, those papers do not consider the industries with strategic interactions between the firms. With symmetric firms, Cabral (2004) and Ghosh and Morita (2007) show insufficient entry in oligopolistic markets. Cabral (2004) compares the welfare effects of entry between simultaneous and sequential entry for different degrees of product market competition and shows that, in the case of sequential entry (which is relevant for the present paper), entry can be insufficient if the product market is characterized by (almost) Bertrand competition.…”

Section: Introductionmentioning

confidence: 99%

“…So, excessive entry under Cournot competition remains in Cabral (2004). Ghosh and Morita (2007) show the possibility of insufficient entry in a vertical structure where entry occurs in the upstream market. In contrast, there is no vertical relationship in our analysis.…”

Section: Introductionmentioning

confidence: 99%

Excess‐entry Theorem: The Implications of Licensing*

Mukherjee

2008

The Manchester School

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We show that, in the presence of technology licensing, entry in an industry with Cournot competition may lead to a socially insufficient, number of firms. Insufficient entry occurs if the own marginal cost of the entrant is sufficiently high. Hence, the justification for anticompetitive entry regulation due to the standard excess‐entry result may not be justified in the presence of licensing. However, if the own marginal cost of the entrant is very low, licensing may create excessive entry for those entry costs where entry does not occur without licensing; thus licensing reduces social welfare though it increases competition.

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“…It was generally believed for a long time that entry is socially excessive in oligopolistic industries with scale economies and symmetric cost firms. Ghosh and Morita (, ) show that entry can be insufficient in an oligopolistic market with scale economies if there are vertical relationships.…”

Section: Introductionmentioning

confidence: 99%

Stackelberg Competition, Innovation and Social Efficiency of Entry

Chao¹,

Lee

Wang

2015

The Manchester School

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In literature, the common wisdom is that entry in an industry with homogeneous products may be socially insufficient instead of excessive in the absence of scale economies. In this paper, we formally introduce endogenous research and development (R&D) and cost asymmetry into both Cournot and Stackelberg competition, and show that entry is socially insufficient in the presence of ex ante asymmetric costs coupled with the spillover effect of R&D.

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Free Entry and Social Efficiency under Vertical Oligopoly

Cited by 33 publications

References 15 publications

Efficiency Wages in Cournot-Oligopoly

Efficiency Wages in Cournot-Oligopoly

Excess‐entry Theorem: The Implications of Licensing*

Stackelberg Competition, Innovation and Social Efficiency of Entry

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