The Economics of Competition, Collusion and In-between

“Empirical evidence shows that many markets are characterized by a few large firms that behave strategically, while cohabiting with a competitive fringe of small firms. Thus, there is a need to consider general equilibrium settings that account explicitly for strategic interactions among big firms. In this short but deep book, d’Aspremont and Dos Santos Ferreira provide several solutions that can reconcile “old” and “new” approaches to market competition through a series of nested frameworks. What makes this book unique is that the authors recognize explicitly the key role played by the labor market for the product market outcome. Their work is, therefore, a fundamental contribution that will allow us to understand better how markets work. Readers will also find a wide range of tools that can be used in different applications.” - Jacques-François Thisse, CORE, Université Catholique de Louvain. “Oligopoly in general equilibrium has proved an elusive goal in theory for decades, with Claude d'Aspremont and Rodolphe Dos Santos Ferreira among the small group of scholars that have taken it seriously. In recent years, the big data revolution has revealed just how important very large firms are, especially in international trade, and has encouraged more work breaking away from the perfectly and monopolistically competitive paradigms. This book could not be more timely therefore, and should be required reading for anyone working in this important field.” - Peter Neary, Georgetown University Qatar and Merton College, University of Oxford. This book provides a methodology for the analysis of oligopolistic markets from an equilibrium viewpoint, considering competition within and between groups of firms. It proposes a well-founded measure of competitive toughness that can be used in empirically relevant applications. This measure reflects the weight put by each firm on competition for market share relative to competition for market size – two dimensions of competition involving conflicting and convergent interests, respectively. It further explores several applications, such as the effect of tougher competition on innovation and of output market power on the emergence of involuntary unemployment, as well as the importance of strategic interactions for investment decisions. The Economics of Competition, Collusion and In-between provides a methodology for the analysis of oligopolistic markets from an equilibrium viewpoint, considering competition within and between groups of firms. It proposes a well-founded measure of competitive toughness that can be used in empirically relevant applications. It aims to offer an alternative tractable model of firm competition opening the application of oligopoly theory to many fields in economics where general equilibrium features are crucial. It will be relevant to those interested in applied industrial organization, trade, macroeconomics and quantitative economics.