Behavioral Heterogeneity and Cournot Oligopoly Equilibrium

Jean-Michel Grandmont ()

No 1044, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: It is not infrequent to see studies of imperfect competition or of industrial organization rest upon questionable foundations such as the hypothesis that inverse market demand is, whenever it is positive, concave or even linear. Assumptions of this sort are not robust (i.e., "additive") in the sense that they are not usually preserved through aggregation of different sectors that would satisfy them individually. The present paper investigates an alternative specification that is based upon the plausible existence of significant heterogeneities among demanders. It is demonstrated that specific forms of demand heterogeneity tend to stabilize market expenditures. In a partial equilibrium context, sufficient demand heterogeneity is shown to imply existence and unicity of a Cournot oligopoly equilibrium.

Keywords: Aggregation; heterogeneity; equivalence scales; oligopoly equilibrium (search for similar items in EconPapers)
JEL-codes: D00 D43 L13 (search for similar items in EconPapers)
Pages: 30 pages
Date: 1993-02
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Citations: View citations in EconPapers (9)

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Journal Article: Behavioural heterogeneity and Cournot oligopoly equilibrium (1993)
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