Aggregation with Cournot competition: the Le Chatelier Samuelson principle

Koebel, Bertrand and François, Laisney (2014): Aggregation with Cournot competition: the Le Chatelier Samuelson principle. Forthcoming in: Annals of Economics and Statistics

Abstract

This paper studies the aggregate substitution and expansion effects triggered by changes in input prices in a context where firms supply a homogeneous commodity and compete in quantities à la Cournot. We derive a sufficient condition for the existence of a Cournot equilibrium and show that this condition also ensures that the Le Chatelier-Samuelson principle is satisfied in the aggregate at the Cournot equilibrium, although it may not be satisfied at the firm level.

• Item Type: MPRA Paper
• Language: English
• Keywords: Aggregation, returns to scale, market power, markup, own-price elasticity.
• Subjects: D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection

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