An increase in a firm’s marginal cost can raise its profit

C-Tier
Journal: Economics Letters
Year: 2025
Volume: 255
Issue: C

Score contribution per author:

1.009 = (α=2.02 / 1 authors) × 0.5x C-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

A firm in a Cournot industry can benefit from an increase in its marginal cost while its rivals’ costs are unchanged. This requires the firm’s profit margin to be increasing in its marginal cost and outputs to be strategic complements for the rivals. The margin increases if inverse demand curvature exceeds the number of firms. The main examples have demand functions with constant price elasticities below 1 and a duopoly.

Technical Details

RePEc Handle
repec:eee:ecolet:v:255:y:2025:i:c:s0165176525003660
Journal Field
General
Author Count
1
Added to Database
2026-01-25