Salant, Stephen W. and Shaffer, Greg (2002): Using Lorenz curves to represent firm heterogeneity in Cournot games.

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Abstract
We derive several comparativestatic results for Cournot games when firms have nonconstant marginalcost curves which shift exogenously. The results permit us to rank certain vectors of equilibrium marginal costs with the same component sum according to their associated social surplus or industry profit. We arrange the components of each vector in ascending order and then construct from the resulting ordered vector its associated Lorenz curve. We show that if two Lorenz curves do not cross, the one reflecting greater inequality is associated with higher social surplus and industry profit. A duality result permits a corresponding ranking of equilibrium output vectors. The same partial ordering is used in the literature on income inequality to rank certain distributions of income and in the literature on decisionmaking under uncertainty to compare the riskiness of certain probability distributions with the same mean.
Item Type:  MPRA Paper 

Original Title:  Using Lorenz curves to represent firm heterogeneity in Cournot games 
Language:  English 
Keywords:  Lorenz curves, Herfindahl index, Cournot games 
Subjects:  D  Microeconomics > D6  Welfare Economics > D63  Equity, Justice, Inequality, and Other Normative Criteria and Measurement L  Industrial Organization > L1  Market Structure, Firm Strategy, and Market Performance > L13  Oligopoly and Other Imperfect Markets D  Microeconomics > D4  Market Structure and Pricing > D43  Oligopoly and Other Forms of Market Imperfection 
Item ID:  21876 
Depositing User:  Stephen W. Salant 
Date Deposited:  07. Apr 2010 09:47 
Last Modified:  15. Feb 2013 22:25 
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URI:  http://mpra.ub.unimuenchen.de/id/eprint/21876 