Explain ‘conjectural variation’ in Cournot duopoly, evaluate its impacts and discuss the policy implication
To fully understand the impacts and policy implications of conjectural variation, one must first understand the part it played in the great indeterminacy debate within marginal economics during the first half of the 20th century. Therefore, this paper shall begin with a short description and history of conjectural variation, followed by how the debates surrounding it led to the final resolution of the indeterminacy issue. The policy implications of that resolution for imperfect markets are then briefly discussed.
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- Nicola Giocoli, 2005. "The escape from conjectural variations: the consistency condition in duopoly theory from Bowley to Fellner," Cambridge Journal of Economics, Oxford University Press, vol. 29(4), pages 601-618, July.
- Wassily Leontief, 1936. "Stackelberg on Monopolistic Competition," Journal of Political Economy, University of Chicago Press, vol. 44, pages 554.
- Newbery, David M G & Stiglitz, Joseph E, 1982. "The Choice of Techniques and the Optimality of Market Equilibrium with Rational Expectations," Journal of Political Economy, University of Chicago Press, vol. 90(2), pages 223-46, April.
- Nicola Giocoli, 2003. "“Conjecturizing” Cournot: The Conjectural Variations Approach to Duopoly Theory," History of Political Economy, Duke University Press, vol. 35(2), pages 175-204, Summer.
- Sonnenschein, Hugo, 1972. "Market Excess Demand Functions," Econometrica, Econometric Society, vol. 40(3), pages 549-63, May.
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