Monopoly and Sustainable Prices as a Nash Equilibrium in Contestable Markets

Leonard Mirman, Yair Tauman and Israel Zang

Chapter 9 in Issues in Contemporary Microeconomics and Welfare, 1985, pp 328-339 from Palgrave Macmillan

Abstract: Abstract The theory of perfectly contestable markets and sustainable prices, summarized in Baumol, Panzar and Willig (1982) is an extension of the ideas of Bain (1956) in which potential competition, unencumbered by frictions, entry or exit costs, affect an incumbent firm’s decisions on prices, outputs and therefore profits. In particular, the theory of perfectly contestable markets studies the effect of the existence of potential entry on market structure, prices and outputs.

Keywords: Nash Equilibrium; Equilibrium Price; Demand Curve; Price Vector; Potential Entrant (search for similar items in EconPapers)
Date: 1985
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DOI: 10.1007/978-1-349-06876-0_9

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