On the Optimal Number of Firms in the Commons: Cournot vs Bertrand

Dragone, Davide ; Lambertini, Luca ; Palestini, Arsen ; Tampieri, Alessandro (2012) On the Optimal Number of Firms in the Commons: Cournot vs Bertrand. Bologna: Dipartimento di Scienze economiche DSE, p. 20. DOI 10.6092/unibo/amsacta/3908. In: Quaderni - Working Paper DSE (856). ISSN 2282-6483.
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Abstract

We revisit the debate on the optimal number of firms in the commons in a differential oligopoly game in which firms are either quantity-or price-setting agents. Production exploits a natural resource and involves a negative externality. We calculate the number of firms maximising industry profits, finding that it is larger in the Cournot case. While industry structure is always inefficient under Bertrand behaviour, it may or may not be so under Cournot behaviour, depending on parameter values. The comparison of private industry optima reveals that the Cournot steady state welfare level exceeds the corresponding Bertrand magnitude if the weight of the stock of pollution is large enough.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Dragone, Davide
Lambertini, Luca
Palestini, Arsen
Tampieri, Alessandro
Keywords
natural resources, oligopoly, pollution, tragedy of commons
Subjects
ISSN
2282-6483
DOI
Deposit date
12 Dec 2013 14:10
Last modified
19 Feb 2014 08:52
URI

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