Working Paper


J. Peter Neary



equilibrium economics dixit stiglitz preferences oligopolies econometric models l40 competition government policy info eu repo classification jel d50 info eu repo classification jel l13 competition policy antitrust law l13 info eu repo classification jel l40 oligopoly gole general oligopolistic equilibrium general equilibrium d50

The road less travelled : oligopoly and competition policy in general equilibrium (2002)

Abstract I review previous approaches to modelling oligopoly in general equilibrium, and proposea new view which in principle overcomes their deficiencies: modelling firms as large in theirown market but small in the economy as a whole. Implementing this approach requires atractable specification of preferences. Dixit-Stiglitz preferences (which imply iso-elasticperceived demand functions) could be used, but "continuum-quadratic" preferences (whichimply linear perceived demand functions) are more convenient. To illustrate their usefulness,I construct a simple closed-economy model of oligopoly in general equilibrium and derivesome surprising implications for competition policy.
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J. Peter Neary

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J. Peter Neary
University College Dublin
Total Publications: 79