Nonparallel Demand Increases in an Asymmetric Cournot Oligopoly
14 Pages Posted: 15 Oct 2008
Date Written: October 14, 2008
Abstract
We examine equilibrium responses of a Cournot oligopoly to two typical types of nonparallel demand increases. Results based on a linear demand curve show that in terms of profits, increases in demand that result in a more elastic demand curve are beneficial to every firm, with large firms benefiting disproportionately. In sharp contrast, only certain small firms benefit from demand increases that result in a more inelastic demand. Our results have implications in marketing and government policy making.
Keywords: Cournot, demand rotation, nonparallel demand increases, profits
JEL Classification: L13, M30
Suggested Citation: Suggested Citation
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