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Ex ante and ex post equilibrium supply curves

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  • Flavio M. Menezes

    (School of Economics, University of Queensland, Brisbane, Australia)

  • John Quiggin

    (School of Economics, University of Queensland, Brisbane, Australia)

Abstract

A number of writers have modelled imperfect markets using games in which the strategies are supply functions, that is, mappings from prices to quantities produced. Two representations of this problem have beenanalyzed, which may be referred to as ex ante and ex post, depending on whether strategies are chosen before or after demand shocks are observed. In this paper, we examine the relationship between equilibria in supply curves derived using the ex ante and ex post approaches. We derive conditions under which a linear ex ante solution coincides with the ex post solution. These conditions generalize the case of linear demand and quadratic cost, analyzed by Klemperer and Meyer. We demonstrate that all ex ante solutions derived in this way are unique.

Suggested Citation

  • Flavio M. Menezes & John Quiggin, 2021. "Ex ante and ex post equilibrium supply curves," Discussion Papers Series 649, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uq2004:649
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    References listed on IDEAS

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    1. Robson, Arthur J., 1981. "Implicit oligopolistic collusion is destroyed by uncertainty," Economics Letters, Elsevier, vol. 7(1), pages 75-80.
    2. Turnbull, Stephen J., 1983. "Choosing duopoly solutions by consistent conjectures and by uncertainty," Economics Letters, Elsevier, vol. 13(2-3), pages 253-258.
    3. Klemperer, Paul D & Meyer, Margaret A, 1989. "Supply Function Equilibria in Oligopoly under Uncertainty," Econometrica, Econometric Society, vol. 57(6), pages 1243-1277, November.
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