Exploring Duopoly Markets with Conjectural Variations

Ludovic Julien (), Olivier Musy and Aurélien W. Saïdi

The Journal of Economic Education, 2014, vol. 45, issue 4, 330-346

Abstract: In this article, the authors investigate competitive firm behaviors in a two-firm environment assuming linear cost and demand functions. By introducing conjectural variations, they capture the different market structures as specific configurations of a more general model. Conjectural variations are based on the assumption that each firm believes its own strategy influences its rival's strategy. Firms derive their optimal choice from these exogenous conjectures, under the form of a conjectural best-response function. The authors' approach fully encompasses the standard measures of market power (the Lerner Index) and concentration (the Herfindahl Index), both depending on the conjectural variations. They finally represent, analytically and graphically, the equilibrium strategies and the associated indexes in a unified framework for any level of competition, ranging from perfect competition to collusion.

Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/00220485.2014.946545 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Exploring Duopoly Markets with Conjectural Variations (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jeduce:v:45:y:2014:i:4:p:330-346

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/VECE20

DOI: 10.1080/00220485.2014.946545

Access Statistics for this article

The Journal of Economic Education is currently edited by William Walstad

More articles in The Journal of Economic Education from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().