Niche vs. central firms: Technology choice and cost-price dynamics in a differentiated oligopoly

Bacchiega, Emanuele ; Garella, Paolo G. (2018) Niche vs. central firms: Technology choice and cost-price dynamics in a differentiated oligopoly. Bologna: Dipartimento di Scienze economiche, p. 24. DOI 10.6092/unibo/amsacta/6036. In: Quaderni - Working Paper DSE (1126). ISSN 2282-6483.
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Abstract

This paper is about technology choices in a differentiated oligopoly. The main questions are: whether the position in the product space affects the choice of technology, how changes in fixed costs affect price outcomes, the strategic responses to policy interventions. The industry is an oligopoly where a central firm is competing with two peripheral (or marginal) ones. The former is shown to be more ready than the latter to adopt a technology with low marginal costs and high fixed costs (Increasing Returns to Scale) rather than one with the opposite pattern (Constant Returns to Scale). The fixed cost in the IRS affects the technology configuration and hence output prices. For instance, a lower fixed cost may trigger lower prices and it is neutral only for given technologies. A price-cap may forestall a change in technologies; nondiscriminatory ad-valorem tax and taxes on variable input, or discriminatory unit taxes can also affect the technology pattern and deliver important effects on prices.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Bacchiega, EmanueleUniversità di Bologna0000-0002-7822-6486
Garella, Paolo G.Università di Milano0000-0002-6830-4786
Keywords
Oligopoly, technology, price dynamics, policy intervention
Subjects
ISSN
2282-6483
DOI
Deposit date
05 Dec 2018 08:11
Last modified
22 May 2019 14:35
URI

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