Efficient Horizontal Mergers in Polluting Industries with Cournot Competition

Lambertini, Luca ; Tampieri, Alessandro (2012) Efficient Horizontal Mergers in Polluting Industries with Cournot Competition. Bologna: Dipartimento di Scienze economiche DSE, p. 11. DOI 10.6092/unibo/amsacta/4205. In: Quaderni - Working Paper DSE (813). ISSN 2282-6483.
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Abstract

We compare a Bertrand with a Cournot duopoly in a setting where production is polluting and exploits natural resources, and firms bear convex production costs. We adopt Dastidar's (1995) approach, yielding a continuum of Bertrand-Nash equilibria ranging above marginal cost pricing also, to show that softening price competition may lead to a lower output production in a Bertrand rather than a Cournot industry. The market structure bringing about the lowest output determines the highest social welfare, given the fact that the negative environmental effects of production more than offset the gain in consumer surplus.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Lambertini, Luca
Tampieri, Alessandro
Keywords
mergers, environmental externality, social welfare, Cournot competition
Subjects
ISSN
2282-6483
DOI
Deposit date
30 Mar 2015 13:14
Last modified
31 Mar 2015 13:42
URI

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