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Title:The aggregate Le Chatelier Samuelson principle with Cournot competition PDF Logo
Authors:Koebel, Bertrand M.
Laisney, François
Issue Date:2010
Series/Report no.:ZEW Discussion Papers 10-009
Abstract:This paper studies the aggregate substitution and expansion effects triggered by changes in input prices, in a context where firms supply a homogenous commodity and compete in quantities à la Cournot. We derive a sufficient condition for the existence of a Cournot equilibrium and show that this condition also ensures that the Le Chatelier-Samuelson principle is likely to be satisfied in the aggregate at the Cournot equilibrium, although it may not be satisfied at the firm level. These results are confirmed by the empirical findings obtained for two-digit US manufacturing industries, which also highlight the importance of imperfect competition for understanding aggregate growth, investment and employment.
Subjects:Aggregation
returns to scale
market power
markup
own-price elasticity
JEL:C33
D24
Document Type:Working Paper
Appears in Collections:ZEW Discussion Papers
Publikationen von Forscherinnen und Forschern des ZEW

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