On Adjustment Costs and the Stability of Equilibria

W. Bentley Macleod ()

Working Paper from Economics Department, Queen's University

Abstract: This paper uses local game theory to introduce a general framework for disequilibrium dynamics based on adjustment costs. In the context of oligopoly, the analysis shows that the existence of adjustment costs will result in a unique equilibrium where market shares are inversely proportional to these costs. This paper also introduces two new solution concepts for n-person normal form games.

Pages: 29 pages
Date: 1984
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Related works:
Journal Article: On Adjustment Costs and the Stability of Equilibria (1985)
Working Paper: On adjustment costs and the stability of equilibria (1985)
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:554

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