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Sharing Markets and Market Shares

In: A Brief History of Price

Author

Listed:
  • John Hartwick

    (Queen’s University)

Abstract

The insularity of the English (‘the wogs start at Calais’) resulted in the huge contributions of Augustin Cournot (1801–1877) of France being neglected for at least forty years. (We might say the same of the huge contributions of Dupuit, Antonelli, Slutsky, and Walras, or von Thünen.) Today every college sophomore studying economics is exposed to two sellers competing for market share in the Cournot duopoly model. A first cut at a notion of a standoff between these two sellers is called Cournot equilibrium and this idea has come to pervade the whole realm of the analysis of competition among individuals in small groups. The idea is simplicity itself. If I must conjecture what you will do if I choose market share alpha, the most reasonable thing to assume is that you will do what is best for you assuming that I will do what is best for me assuming that you are doing what is best for you! This in general differs from us pooling our resources and reaping the rewards. This latter is monopoly. And there is no indeterminacy from infinite regress in the conjectures. A Cournot equilibrium is not hard to find … with pencil and paper, that is. It is very hard to figure out how two sellers might end up at one unless they were ‘placed there’ by some deus ex machina. In jigging and jogging to a Cournot equilibrium each competitor must continually have his cunent belief about what his rival is up to fail to be conoborated, up until they each get to the equilibrium! Much of economics is plagued by this problem - equilibria in search of equilibrating mechanisms.

Suggested Citation

  • John Hartwick, 1993. "Sharing Markets and Market Shares," Palgrave Macmillan Books, in: A Brief History of Price, chapter 3, pages 40-54, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-37466-9_3
    DOI: 10.1057/9780230374669_3
    as

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