To Adjust or not to Adjust after a Cost-Push Shock? A Simple Duopoly Model with (and without) Resilience

Arbeitspapier

We characterize the equilibrium in a homogeneous good Cournot duopoly in which firms have the choice to react to a cost-push shock by paying a lump-sum adjustment cost in order to offset the initial rise in marginal cost. Our results show that the size of the shock and the size of the adjustment cost jointly determine the nature and the number of the equilibria generated in the game. In particular, if the adjustment cost is high enough, at least one firm decides not to adjust at the pure strategy equilibrium, and such a partial adjustment by the industry can be socially efficient as well. Some implications of this partial equilibrium analysis about an industry' resilience are outlined.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Quaderni - Working Paper DSE ; No. 970

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) ; Oligopoly and Other Imperfect Markets

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Lambertini, Luca ; Marattin, Luigi
• Ereignis: Veröffentlichung
• (wer): Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE)
• (wo): Bologna
• (wann): 2014

Weitere Informationen

• DOI: doi:10.6092/unibo/amsacta/4089
• Handle: http://hdl.handle.net/10419/159808
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ