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The Conventionally Stable Sets in Noncooperative Games with Limited Observations: The Application to Monopoly and Oligopoly

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  • Mamoru Kaneko

    (University of Tsukuba)

Abstract

This paper applies the theory of the conventionally stable set to monopolistic and oligopolistic markets. A market model with a finite number of producers and a continuum of buyers is presented and then is formulated as a strategic game in which the producers' strategies are prices and the buyers' strategies are demands for commodities. It is shown that a conventionally stable set in this game corresponds to a conventionally stable one in a game where the producers are only players but the buyers are treated as a certain kind of demand function. Furthermore, it is shown that the theory of the conventionally stable set is compatible with the classical monopoly solution, the kinked-demand-curve solution and the leader-follower solution. This new theory makes their structures much more transparent.

Suggested Citation

  • Mamoru Kaneko, 1982. "The Conventionally Stable Sets in Noncooperative Games with Limited Observations: The Application to Monopoly and Oligopoly," Cowles Foundation Discussion Papers 614, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:614
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    File URL: https://cowles.yale.edu/sites/default/files/files/pub/d06/d0614.pdf
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    References listed on IDEAS

    as
    1. Gardner, Roy, 1977. "Shapley value and disadvantageous monopolies," Journal of Economic Theory, Elsevier, vol. 16(2), pages 513-517, December.
    2. Aumann, Robert J., 1973. "Disadvantageous monopolies," Journal of Economic Theory, Elsevier, vol. 6(1), pages 1-11, February.
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    Cited by:

    1. Kaneko, Mamoru, 1982. "Some remarks on the folk theorem in game theory," Mathematical Social Sciences, Elsevier, vol. 3(3), pages 281-290, October.

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