Rights:
& 2000 Elsevier Science B.V. All rights reserved.
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 iIn 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.[+][-]