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A Mathematical Note on Entry, Exit, and Oligopoly
Lester G. Telser
Abstract
This note has two purposes. Its first is to analyze the effects on the demand for each member of a group of firms producing substitute goods when there is a change in the number offered for sale. This analysis is confined to linear demand relations. The second purpose is to apply the analysis to a situation in which a group of firms either collude or merge. For certain linear demand relations it is shown that mergers will not result in a reduction of variety because of demand conditions.
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