Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
Forward contracting in an N <math altimg="urn:x-wiley:10586407:media:jems12610:jems12610-math-0001" wiley:location="equation/jems12610-math-0001.png" display="inline" xmlns="http://www.w3.org/1998/Math/MathML"><mrow><mrow><mi>N</mi></mrow></mrow></math>‐firm quantity‐setting oligopoly with heterogeneous costs introduces the possibility that relatively efficient firms deter the activity of inefficient rivals by reducing their margins. The equilibrium number of firms producing positive quantities can be any of 1 , 2 , … N <math altimg="urn:x-wiley:10586407:media:jems12610:jems12610-math-0002" wiley:location="equation/jems12610-math-0002.png" display="inline" xmlns="http://www.w3.org/1998/Math/MathML"><mrow><mrow><mn>1</mn><mo>,</mo><mn>2</mn><mo>,</mo><mi mathvariant="normal">\unicode{x02026}</mi><mi>N</mi></mrow></mrow></math> depending on the level of demand relative to firm‐specific activity thresholds, with more firms active at higher demand levels. If only one firm is active, the Bertrand outcome is obtained. This potential reduction of the number of active firms may lessen the procompetitive effect of forward sales, but does not eliminate it entirely. We explore the competition policy implications of the endogenous activity of firms, in particular for merger analysis.