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oligopolies with two, three, four, and five firms in a unified frame. With two firms we find some collusion. Three …-firm oligopolies tend to produce outputs at the Nash level. Markets with four or five firms are never collusive and typically settle at …
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This paper provides a novel rationale for the regulation of market size when heterogeneous firms compete. A regulator seeks to maximize total welfare by choosing the number of firms allowed to enter the market, e.g. by issuing a certain number of licenses. Opening up the market for more firms...
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