Which Markets Would Sellers Choose if They Could? - Wishful Thinkink and Monopolistic Competition

Werner G³th
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Werner G³th: Department of Economics, Institute for Economic Theory III, Humboldt-University of Berlin, Berlin, Germany
Authors registered in the RePEc Author Service: Werner Güth ()

Homo Oeconomicus, 1999, vol. 15, 491-495

Abstract: The question "which utility function would homo oeconomicus choose if he could?" (Frank, 1987) is answered for interactive markets where sellers are assumed to freely choose their dependency on the other's market behavior. We first solve the market for all possible constellations of mutual dependencies and derive then the unique mutually desirable constellation of market interdependency: The sellers dream of the best market, but not necessarily to be monopolists! It is finally discussed how this result is related to the evolutionary justification of monopolistic competition (G³th and Huck, 1997) or altruism (Bester and G³th, 1998).

Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:hom:homoec:v:15:y:1999:p:491-495

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