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A Note on Cournot Competition in Differentiated Oligopolies

Abstract In this paper, we study a Cournot competition where there are a group of firms producing a homogeneous product and another group producing a differentiated product. We find that, fixing the total number of firms in the market, each firm’s profit is U-shaped and convex in the number of firms producing the same product when the degree of substitution is large, and each firm’s profit is U-shaped in the cross-price effect parameter when the number of firms producing the same product is large.