COOPERATION AND COMPETITION IN A HETEROGENEOUS OLIGOPOLY MODEL

抄録

We utilize a simple two-product-one-factor oligopoly model with n_i identical firms in industry i(i=1, 2). Assuming the concavity of the profit functions, this paper will establish, among other things, that (a) if firms behave “more collusively” in an industry, the individual outputs and the aggregate output of the industry diminish and the price increases. In particular, this allows us to compare the output levels corresponding to the competitive equilibrium, Cournot equilibrium and that in the collusive solutions. Another point we hope to stress is that (b) the aggregate profit of an industry and profits of individual firms may change rather counter-intuitively when behavioral rules of firms change.
In reference to (b) above, we will give somewhat unexpected results in which the aggregate profit of the first industry is smallest when all the firms in the industry (or in each of the two industries) cooperate, at an intermediate profit level when they act as Cournot oligopolists and largest when they act as price takers.