Rationalizability and Efficiency in an Asymmetric Cournot Oligopoly

Article dans une revue: This paper studies rationalizability in a linear asymmetric Cournot oligopoly with a unique Nash equilibrium. It shows that mergers favors uniqueness of the rationalizable outcome. When one requires uniqueness of the rationalizable outcome maximization of consumers’ surplus may involve a symmetric oligopoly with few firms. We interpret uniqueness of the rationalizable outcome as favoring a dampening of strategic ‘coordination’ uncertainty. An illustration to the merger between Delta Air Lines and Northwest shows that a reallocation of 1 % of market share from a small carrier to a larger one has implied a lower production volatility over time, yielding a 1.5 % decrease in the coefficient of variation of number of passengers.

Auteur(s)

Gabriel Desgranges, Stéphane Gauthier

Revue
  • International Journal of Industrial Organization
Date de publication
  • 2015
Mots-clés JEL
D43 D84 L40
Mots-clés
  • Competition policy
  • Cournot oligopoly
  • Dominance solvability
  • Efficiency
  • Rationalizability
  • Stability
  • Airline industry
Pages
  • in press, accepted manuscript
Version
  • 1