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On the competitive effects of divisionalization

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URI: https://hdl.handle.net/10016/3813
ISSN: 0165-4896
DOI: 10.1016/S0165-4896(98)00047-X
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CORCHON_2000_39_CL_ps.pdf (267.52 KB)
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2000-01
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Elsevier
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Abstract
In this paper, we assume that firms can create independent divisions which compete in quantities in a homogeneous good market. Assuming identical firms and constant returns to scale, we prove that the strategic interaction of firms yields Perfect Competition if the number of firms is beyond some critical level. Assuming a fixed cost per firm and an upper bound on the maximum number of divisions, we show that when this upper bound tends to infinity and the fixed cost tends to zero, market equilibrium may yield either Perfect Competition or a Natural Oligopoly.
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Divisionalization, Oligopoly
Bibliographic citation
Mathematical Social Sciences. (Enero 2000), vol. 39, nº 1, p. 71-80
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