An asymmetric oligopoly model and a method for its empirical application (Q1601298)

The paper develops an asymmetric game-theoretic static oligopoly model that is suitable for empirical work on oligopolistic markets. The developed model allows for asymmetries between firms in their cost levels, in firm-specific levels of product differentiation, and in the relative market sizes pertaining to each firm. The conduct of individual firms is analysed in the theoretical model, as well as market performance. The firms' empirical conduct is then related to the analytically deducted scale of game-theoretic optimal outcomes. Welfare consequences of the different conduct are finally quantified in terms of losses of consumer surpluses.