We examine equilibrium responses of a Cournot oligopoly to two typical types of nonparallel demand increases. The results based on a linear demand curve show that in terms of profits, increases in demand that result in a more elastic demand curve are beneficial to every firm, with large firms benefiting disproportionately. In sharp contrast, only certain small firms benefit from demand increases that result in a more inelastic demand. Our results have implications in marketing and government policy making.
|Number of pages||5|
|Journal||Applied Economics Letters|
|State||Published - 2010|
Copyright 2010 Elsevier B.V., All rights reserved.
ASJC Scopus subject areas
- Economics and Econometrics