Effects of Globalization under Consistent Conjectures.

We study the effects of merging two separate markets each originally monopolized by a producer into a globalized duopoly market. We consider a linear inverse demand with cap price and quadratic cost functions. After globalization , we find the consistent c o njectural variations e quilibrium (CCVE) of t he duopo ly game. Unlike in the Cournot e quilibrium, a complete sy mmetry (identical cost function s parameters of both firms) does not imply the strongest coincident profit degradation. For the situation where both agents are low - marginal cost firms, we find that the company with a technical advantage over her rival has a better ratio of the current and previous profits .Moreover, as the rival becomes ever weaker, that is, as the slope of the rivals marginal cost function increases, the profit ratio improves.