On the competitive effects of divisionalization

Luís C. Corchón, Miguel González-Maestre

Research output: Contribution to journalArticleResearchpeer-review

14 Citations (Scopus)

Abstract

In this paper, we assume that firms can create independent divisions which compete in quantities in a homogeneous good market. Assuming identical firms and constant returns to scale, we prove that the strategic interaction of firms yields Perfect Competition if the number of firms is beyond some critical level. Assuming a fixed cost per firm and an upper bound on the maximum number of divisions, we show that when this upper bound tends to infinity and the fixed cost tends to zero, market equilibrium may yield either Perfect Competition or a Natural Oligopoly. © Elsevier Science B.V.
Original languageEnglish
Pages (from-to)71-79
JournalMathematical Social Sciences
Volume39
DOIs
Publication statusPublished - 1 Jan 2000

Keywords

  • Divisionalization
  • L13
  • L20
  • L40
  • Oligopoly

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