Inferring the strategy space from market outcomes

Flavio Menezes and John Quiggin

No 151206, Risk and Sustainable Management Group Working Papers from University of Queensland, School of Economics

Abstract: In this paper we show that, if demand varies stochastically, and firms compete after the realization of demand shocks, the strategy space may be inferred from market evidence. The key idea is that, in equilibrium, each firm acts as a monopolist, choosing the optimal price-quantity combination from a residual demand curve determined by a given observation of market demand and the (equilibrium) strategies of the other firms.

Keywords: Industrial; Organization (search for similar items in EconPapers)
Pages: 10
Date: 2013-01-17
New Economics Papers: this item is included in nep-com
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uqsers:151206

DOI: 10.22004/ag.econ.151206

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