Abstract
The theory of games and the theory of oligopoly have a long connection. Cournot (1838) invented the non-co-operative equilibrium in the context of homogeneous products oligopoly. Nash (1951) generalised the Cournot equilibrium, widening its reach to non-co-operative games in general. Game theory deals, in the main, with decision situations in which relatively few agents interact and have their interests at least partly in opposition, making it reasonable that each agent will concern himself with trying to understand the behaviour of each rival agent. Oligopoly is the most obvious context in economics where the same circumstances prevail. Furthermore, game-theoretic thinking entered oligopoly with Cournot, roughly a century before game theory made a good start as a discipline. The non-co-operative equilibrium is often called the Cournot-Nash equilibrium in honour of its parentage.
My large debt to Larry Samuelson should be evident to anyone this paper. It is a pleasure to acknowledge it explicitly.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Axell, B. O. (1977) ‘Search Market Equilibrium’, Scandinavian Journal of Economy, vol. 79, no. 1, pp. 20–40.
Battalio, R. C, Kagel, J., Rachlin, H. and Green, L. (1981) ‘Commodity Choice Behaviour with Pigeons as Subjects’, Journal of Political Economy, vol. 89, no. 11.
Burdett, K. and Judd (1983) ‘Equilibrium Price Dispersion’, Econometrica, vol. 51, July, pp. 955–69.
Burdett, K. and T. Vishwanath (1986) ‘Matching Equilibrium in a Bertrand Duopoly Model’, mimeo, North Western University.
Butters, Gerard R. (1977) ‘Price Distributions of Sales and Advertising Prices’, Review of Economic Studies, vol. 44, pp. 465–91.
Carlson, J. A. and Pescatrice, D. R. (1980) ‘Persistent Price Distribution’, Journal of Economy and Business, vol. 33 (Fall) pp. 21–7. Dahlby, B. and West, D. (1986) ‘Price Dispersion in an Automobile Insurance Market’, Journal of Political Economy, vol. 94, April, pp. 418–38.
Diamond, P. (1987) ‘Consumer Differences and Prices in a Search Model’, Quarterly Journal of Economics, vol. CII, May, no. 2, pp. 429–36.
Gale, D. (1987) ‘Price Setting and Competition in a Simple Duopoly Model’, mimeo, University of Pittsburgh and University of Pennsylvania.
Kirman, A. and Sobel, M. (1974) ‘Dynamic Oligopoly with Inventories’, Econometrica, vol. 42, no. 2, March, pp. 279–87.
Kormendi, R. C. (1979) ‘Dispersed Transactions Prices in a Model of Decentralised Pure Exchange’ in S. A. Lippman, and J. McCall (eds) Studies in the Economics of Search (Amsterdam: North Holland).
Marvel, H. P. (1976) ‘The Economics of Information and Retail Gasoline Behaviour: An Empirical Analysis’, Journal of Political Economy, vol. 84, pp. 1033–60.
Mathewson, G. F. (1983) ‘Information, Search, and Price Variability of Individual Life Insurance Contracts’, Journal of Industrial Economy, vol. 32, pp. 131–48.
Negishi, T. (1986) ‘Thornton’s Criticism of Equilibrium Theory and Mill’, History of Political Economy, vol. 18, no. 4, pp. 567–77.
Pratt, J., Wise, D. A. and Zeckhauser, R. J. (1979) ‘Prices Differences in Almost Competitive Markets’, Quarterly Journal of Economics, vol. 93, pp. 189–211.
Rob, R. (1985) ‘Equilibrium Price Distributions’, Review of Economic Studies, vol. 52, pp. 487–504.
Rothschild, M. (1974) ‘Searching for the Lowest Price when the Distribution of Prices is Unknown’, Journal of Political Economy, vol. 82, pp. 689–712.
Shaffer, M. E. (1988a) ‘Evolutionarily Stable Strategies for a Finite Population and Variable Contest Size’, mimeo, London School of Economics.
Shaffer, M. E. (1988b) ‘Economic Natural Selection and “Relative” versus “Absolute” Profit Maximisation’, mimeo, Department of Economics, London School of Economics.
Smart, D. R. (1974) Fixed Point Theorems (Cambridge: Cambridge University Press).
Smith, J. M. (1974) ‘The Theory of Games and the Evolution of Animal Conflict’, Journal of Theoretical Biology, vol. 47, pp. 209–19.
Smith, J. M. (1982) Evolution and the Theory of Games (Cambridge: Cambridge University Press).
Smith, V. L. I (1989) ‘Theory, Experiments and Economies’, Journal of Economic Perspectives, Winter, pp. 151–69.
Stigler, G. J. (1961) ‘The Economics of Information’, Journal of Political Economy, vol. 70, no. 5, part 2, pp. 94–105.
Telser, L. (1973) ‘Searching for the Lowest Price’, American Economic Review, vol. 63, pp. 41–9.
Van Hoomissen, T. (1988) ‘Price Dispersion and Inflation: Evidence from Israel’, Journal of Political Economy, vol. 96, no. 6, pp. 1303–13.
Varian, H. R. (1980) ‘A Model of Sales’, American Economic Review, vol. 76, pp. 651–9.
Author information
Authors and Affiliations
Editor information
Copyright information
© 1991 International Economic Association
About this chapter
Cite this chapter
Friedman, J.W. (1991). The ‘Folk Theorem’ and Continuous Reaction Functions: A Synthesis. In: Arrow, K.J. (eds) Issues in Contemporary Economics. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-11573-0_10
Download citation
DOI: https://doi.org/10.1007/978-1-349-11573-0_10
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-11575-4
Online ISBN: 978-1-349-11573-0
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)