The aggregate relation between profits and concentration is consistent with Cournot behavior

An important and controversial stylized fact in industrial organization is the positive correlation between industry profit and concentration. One int erpretation of this finding is based on the theories of Chamberlin and Stig ler, which imply that concentrated industries facilitate collusion. But non -cooperative profit maximizing behavior can also generate a positive correl ation. This paper presents an equilibrium model of oligopoly which nests th e behavioral assumptions of Bertrand, Cournot, and Chamberlin. Simulations of the model under the Cournot assumption yield regression coefficients for the profits-concentration relation that are very close to the estimated co efficients in the literature.