Abstract
This paper extends the standard Forchheimer dominant firm model by making more explicit shifts in the fringe supply when the market price set the dominant firm deviate from its limit price. It demonstrated how, when a dominant firm engages in short-run profit maximization, the market price it sets in the long run will equal its limit price and that, in certain situations, increased production cost for fringe lead to an increase in the number of fringe firms in the long run.
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Cherry, R. The Dominant Firm Model Revisited. Review of Industrial Organization 16, 89–95 (2000). https://doi.org/10.1023/A:1007782616347
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DOI: https://doi.org/10.1023/A:1007782616347