Nonparallel Demand Increases in an Asymmetric Cournot Oligopoly

14 Pages Posted: 15 Oct 2008

See all articles by Yuqing Zheng

Yuqing Zheng

University of Kentucky - College of Agriculture - Department of Agricultural Economics

Harry M. Kaiser

Cornell University - School of Applied Economics and Management

Date Written: October 14, 2008

Abstract

We examine equilibrium responses of a Cournot oligopoly to two typical types of nonparallel demand increases. 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.

Keywords: Cournot, demand rotation, nonparallel demand increases, profits

JEL Classification: L13, M30

Suggested Citation

Zheng, Yuqing and Kaiser, Harry M., Nonparallel Demand Increases in an Asymmetric Cournot Oligopoly (October 14, 2008). Applied Economics Letters, Vol. 16, 2009, Available at SSRN: https://ssrn.com/abstract=1284566

Yuqing Zheng (Contact Author)

University of Kentucky - College of Agriculture - Department of Agricultural Economics ( email )

Lexington, KY 40546
United States

Harry M. Kaiser

Cornell University - School of Applied Economics and Management ( email )

248 Warren Hall
Ithaca, NY 14853
United States
607-255-1598 (Phone)
607-254-4335 (Fax)

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