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Oligopoly and Other Imperfect Markets

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Oligopoly and other imperfect markets refer to market structures characterized by a limited number of firms, leading to market power and strategic interactions among them. These markets deviate from perfect competition, resulting in pricing, output decisions, and barriers to entry that differ from those in perfectly competitive markets.
lightbulbAbout this topic
Oligopoly and other imperfect markets refer to market structures characterized by a limited number of firms, leading to market power and strategic interactions among them. These markets deviate from perfect competition, resulting in pricing, output decisions, and barriers to entry that differ from those in perfectly competitive markets.

Key research themes

1. How does imperfect competition affect efficiency and economic freedom in oligopolistic markets?

This research area investigates the normative and economic foundations of imperfect competition, particularly how economic freedom and efficiency interact in markets characterized by oligopoly and other imperfect market structures. It addresses the trade-offs and complementarities between individual liberty in economic decisions and overall social welfare, revisiting classical economic philosophy in light of modern antitrust and regulatory debates.

Key finding: The paper develops a consequentialist defense of economic freedom under imperfect competition, arguing that economic freedom and efficiency are not inherently conflicting but can be joint foundations of market economies.... Read more
Key finding: This study demonstrates that oligopolistic markets tend to produce quality levels that deviate systematically from social optima, particularly when quality affects sunk costs. It finds that such markets often provide too low... Read more
Key finding: The paper introduces an incentive mechanism whereby a regulator can implement welfare-improving outcomes in Cournot oligopoly markets with increasing returns to scale without running a deficit. Specifically, by subsidizing... Read more
Key finding: The study explores equilibrium behaviors in asymmetric oligopolies, revealing that larger firms bear more responsibility for maintaining collusion while smaller rivals free-ride, leading to larger unused capacities and... Read more

2. What are the equilibrium characteristics and stability conditions in oligopolistic markets with differentiated products and strategic expectations?

This theme centers on the formal modeling of oligopoly equilibria when firms compete in quantity or price with product differentiation and strategic expectations about rivals’ behaviors. It critically extends classical Cournot and Bertrand frameworks to incorporate realistic market features such as partial product differentiation, coalition formation, asymmetric cost structures, and dynamic strategic responses, with applications in telecom and other industries.

Key finding: By focusing on response functions rather than pure profit maximization, the paper unifies Cournot and Bertrand industrial structures into a pragmatic model that captures real-world constraints such as production minimums and... Read more
Key finding: The study extends the Cournot duopoly model to an oligopoly of three firms with differentiated products and differing production technologies, incorporating naïve, adaptive, and rational expectations frameworks. Applied to... Read more
Key finding: This paper generalizes monopolistic competition by employing variable elasticity of substitution as the core primitive, relaxing the restrictive CES framework. It derives necessary and sufficient conditions for demand and... Read more

3. How do strategic firm choices in internal organization and financing interact under imperfect competition?

This theme addresses the interplay between firms’ financial structure (debt financing) and internal organizational incentives (managerial delegation) in oligopolistic contexts with quantity or price competition. It systematically investigates whether these strategic choices are substitutes or complements and elucidates how such decisions affect competitive behavior and firm performance in imperfectly competitive markets.

Key finding: The paper constructs a unified game-theoretic model showing that in oligopolistic markets, firms strategically treat debt financing and managerial delegation as substitutes under quantity competition but as complements under... Read more
Key finding: Echoing the above, this paper confirms the substitutability of debt and managerial delegation under Cournot competition and their complementarity under Bertrand competition through a rigorous modeling framework, reinforcing... Read more

All papers in Oligopoly and Other Imperfect Markets

The objective of our paper is to depict which creative strategies buyers can develop to by-pass oligopolies more efficiently and to identify ways of monitoring the results. Methodologically speaking we have analyzed the way of operating... more
Este paper considera el efecto del cargo por confiabilidad sobre el precio spot de la energía eléctrica en Colombia, implementado en 2006 con el fin de incentivar a los generadores existentes o nuevos inversionistas para mejorar la... more
El artículo tiene dos principales objetivos. El primero es construir un modelo de Cournot que simule el comportamiento estratégico de las empresas generadoras líderes del mercado eléctrico colombiano, usando el Precio Marginal del Sistema... more
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