The Conventionally Stable Sets in Noncooperative Games With Limited Observations: The Application to Monopoly and Oligopoly
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.
Kaneko, Mamoru, "The Conventionally Stable Sets in Noncooperative Games With Limited Observations: The Application to Monopoly and Oligopoly" (1982). Cowles Foundation Discussion Papers. 850.