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Perspectives on oligopoly theory

University of British Columbia

This thesis is a collection of four essays studying the oligopoly problem from various perspectives. In Chapter 1 it is demonstrated that though demand curves are generally continuous in differentiated product models, the non-existence of a Nash equilibria is a generic property. Chapter 2 shows that the use of the classical Cournot-Nash equilibrium in quantities is often equivalent to the use of the core solution concept. Chapter 3 applies the theory of local games to the oligopoly problem to show the relationship between the local stability of equilibria and adjustment costs. Necessary and sufficient conditions for stability are provided which will often yield a unique locally stable equilibrium. Finally Chapter 4 studies the rationality of both conscious parallelism and predatory pricing in a dynamic model with free entry. An axiomatic foundation for conscious parallelism is provided which is then used to show that predatory pricing, widely defined, is always rational in the face of potential entry. By rational we mean subgame perfect Nash equilibria in the sense of Selten [1975].

Text

2010-06-13

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http://hdl.handle.net/2429/25629

Economics

University of British Columbia

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