Oligopoly studies: on the interaction of private firms with homogeneous and heterogeneous objectives
Leal Coronado, Mariel Adriana
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Two oligopoly studies compose this thesis. The first study considers that firms have the homogenous objective of maximizing their profits. The second one contemplates the presence of a private firm with a different objective, a consumer friendly firm. In detail, in the second chapter, the effects of uniting two separated markets each monopolized initially by a producer into a globalized duopoly market are studied. A linear inverse demand with cap price and quadratic cost functions is considered. After globalization, the Consistent Conjectural Variations Equilibrium of the duopoly game is found. Unlike the Cournot Equilibrium, complete symmetry (same cost function’s parameters of both firms) does not represent the strongest coincident profit degradation. When both firms are low-marginal cost firms, it is found that the firm with a technical advantage over her rival has a better ratio and as the rival becomes weaker, this is, as the slope of the rival’s marginal cost function increases, the profit ratio improves. In the third chapter, the study considers a Cournot duopoly model with a consumer-friendly firm and analyzes the interplay between the strategic choice of abatement technology and the timing of government’s commitment to the environmental tax policy. It is shown that the optimal emission tax under committed policy regime is always higher than that under non-committed one, but both taxes can be higher than marginal environmental damage when the consumerfriendliness is high enough. It is also shown that the emergence of a consumer friendly firm might yield better outcomes to both welfare and environmental quality without the commitment to the environmental policy.