N-FIRM OLIGOPOLY WITH GENERAL ISO-ELASTIC DEMAND

Authors

  • Rodney Beard

    Corresponding author
    1. University of Glasgow
    • Correspondence: Rodney Beard, Institute of Biodiversity, Animal Health and Comparative Medicine, Jarrett Building Garscube Campus, Glasgow, G61 1QH, UK; Email: Rodney.M.Beard@gmail.com. The paper has benefitted from the comments of two anonymous referees whose comments have considerably improved the argument. I would also like to acknowledge the support of Groupe Sup de Co La Rochelle (La Rochelle Business School) where much of the research for the paper was conducted.

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ABSTRACT

In this note oligopoly with iso-elastic demand is analysed. Unlike previous studies we consider general iso-elastic demand rather than the case of unit elasticity. An n-firm Nash-Cournot equilibrium for the case of heterogeneous constant marginal costs is derived. The main result is a closed-form solution that shows the dependency of the equilibrium on the elasticity of demand and the share of industry costs. The result has applications to a wide range of areas in oligopoly theory by allowing comparisons across markets with different elasticities of demand.

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