Volker Nocke, University of Mannheim: Multiproduct-Firm Oligopoly: An Aggregative Games Approach
ESOP seminar. Volker Nocke is a Professor of Economics at the University of Mannheim. He will present a paper entitled "Multiproduct-Firm Oligopoly: An Aggregative Games Approach", co-authored by Nicolas Schutz.
Volker Nocke. Photo: University of Mannheim
We develop an aggregative games approach to study oligopolistic price competition with multiproduct firms. We introduce a new class of demand systems, derived from discrete/continuous choice, and nesting CES and logit demand systems. The associated pricing game with multiproduct firms is aggregative and a firm's optimal price vector can be summarized by a uni-dimensional sufficient statistic, the ı-markup. We prove existence of equilibrium using a nested fixed-point argument, and provide conditions for equilibrium uniqueness. In equilibrium, firms may choose not to o er some products. We analyze the pricing distortions and provide monotone comparative statics. Under CES and logit demands, another aggregation property obtains: All relevant information for determining a firm's performance and competitive impact is contained in that firm's uni-dimensional type. Finally, we re-visit classic questions in static and dynamic merger analysis, and study the impact of a trade liberalization on the inter- and intra-firm size distributions, productivity and welfare.
Host: Bård Harstad