Journal
OPERATIONS RESEARCH
Volume 60, Issue 2, Pages 335-350Publisher
INFORMS
DOI: 10.1287/opre.1110.1017
Keywords
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Funding
- National Science Foundation [0758061-CMII, 0735905-EFRI]
- Singapore-MIT Alliance
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We study a generalized model of quantity (Cournot) oligopolistic competition. The impact of competition on social surplus and firms' profit is analyzed. Firms produce multiple differentiated products and face production constraints. We compare the social surplus produced by competing firms and by colluding firms with the maximum achievable total surplus in the market. Similarly, we quantify the loss of profit that firms incur by competing instead of colluding. Our goal is to understand how the presence of competition affects the firms and society as a whole, but also to determine what are the key drivers of the inefficiencies that arise due to competition.
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