Soft-Capacity constrained price competition with entry and a minimum firm size: Chamberlin without differentiation

Marie-Laure Cabon-Dhersin (1) , Nicolas Drouhin (2)

1 CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation
2 UNICAEN - Université de Caen Normandie

We consider a model of price competition in a homogeneous good, with soft-capacity constraints, in the special case of a Sone-Geary production function that implies a minimum firm size and leads to a U-shaped average cost function. We study free entry and obtain a Chamberlin-like result: zero profit and a positive markup at equilibrium.

Mots clés: price competition; soft-capacity constraint; tacit collusion; returns to scale; free-entry

Domaines: Economies et finances

Marie-Laure Cabon-Dhersin, Nicolas Drouhin. Soft-Capacity constrained price competition with entry and a minimum firm size: Chamberlin without differentiation. 2020. ⟨hal-02909801⟩