Monopoly Equilibria and Catastrophe Theory

Giacomo Bonanno ()

Australian Economic Papers, 1987, vol. 26, issue 49, 197-215

Abstract: A simple characterization of profit maximization is provided, based on the hazard rate function corresponding to the distribution of res ervation prices. Catastrophe theory is then applied to characterize t he dependence of equilibrium price and output on cost and demand cond itions. The analysis is concluded with an example where the monopolis t's reaction to changes in demand is not only discontinuous but also perverse. Copyright 1987 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia

Date: 1987
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