Behavioral Heterogeneity and Cournot Oligopoly Equilibrium
AbstractIt is not infrequent to see studies of imperfect competition or of industrial organization rest upon questionable foundations such as the hypothesis that inverse market demand is, whenever it is positive, concave or even linear. Assumptions of this sort are not robust (i.e., "additive") in the sense that they are not usually preserved through aggregation of different sectors that would satisfy them individually. The present paper investigates an alternative specification that is based upon the plausible existence of significant heterogeneities among demanders. It is demonstrated that specific forms of demand heterogeneity tend to stabilize market expenditures. In a partial equilibrium context, sufficient demand heterogeneity is shown to imply existence and unicity of a Cournot oligopoly equilibrium.
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Bibliographic InfoPaper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1044.
Length: 30 pages
Date of creation: Feb 1993
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- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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