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Marginal Utility And Cournot Stability Under Market Entry

Author

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  • SOLDATOS Gerasimos

    (American University of Athens, Athens, Greece)

Abstract

This paper introduces into the discussion of the stability of quantity-oligopoly equilibrium, the role that the slope of the marginal utility curve and of market entry in shaping the equilibrium and its stability. It does so by considering inverse multivariate linear demand functions and the notion of stability related to multivariate mean value theorem. The equilibrium cluster of Cournot sellers is determined by the stability dictated by this theorem and the rate of decline of the marginal utility of the product under consideration. Strategic complementarity is found to be the case under product heterogeneity, while the strategic substitutability associated with product homogeneity, induces a modification of Cournot limit theorem.

Suggested Citation

  • SOLDATOS Gerasimos, 2021. "Marginal Utility And Cournot Stability Under Market Entry," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 16(1), pages 187-197, April.
    • Handle: RePEc:blg:journl:v:16:y:2021:i:1:p:187-197
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