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Competition in supply functions and conjectural variations: a unified solution

Author

Listed:
  • Flavio M. Menezes

    (Australian Institute for Business and Economics, University of Queensland, Brisbane, Australia)

  • John Quiggin

    (School of Economics, University of Queensland, Brisbane, Australia)

Abstract

This paper reconciles the concepts of ex ante and ex post supply function equilibria of, respectively, Klemperer and Meyer (1989) and Menezes and Quiggin (2020) with the conjectural variations equilibrium of Bowley (1924) and Bresnahan (1981). We show that under appropriate conditions, the ex ante and ex post equilibrium supply curves coincide with each other and with the consistent conjectural equilibrium solution. Further, this is a dominant strategy equilibrium for both ex ante and ex post games, and represents the case in which players are indifferent regarding move order. We explore the implications of our results for empirical work.

Suggested Citation

  • Flavio M. Menezes & John Quiggin, 2023. "Competition in supply functions and conjectural variations: a unified solution," Australian Institute for Business and Economics DP012023, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uqaibe:1
    as

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    File URL: https://aibe.uq.edu.au/files/9232/DP012023.pdf
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    References listed on IDEAS

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    6. E. Glen Weyl & Michal Fabinger, 2013. "Pass-Through as an Economic Tool: Principles of Incidence under Imperfect Competition," Journal of Political Economy, University of Chicago Press, vol. 121(3), pages 528-583.
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    More about this item

    Keywords

    Imperfect competition; games in supply functions; conjectural variations;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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