Oligopoly under Rivalrous Consonance: An Exploration of Phantom Objective Functions and some Algorithmic Considerations

Abstract

In economic theorizing economic agents are generally depicted as optimizing objective functions based on narrow self-interest, with global or social variable values emerging from the interaction of the individual optimization procedure. An interesting question is whether there exists a ‘phantom’ objective function whose optimization would yield the same solutions as the set of interacting optimizing decisions does. For example, to cite a famous case, in a purely competitive capitalistic general equilibrium model, is there a social welfare function whose optimization would yield the same solutions for the model as those obtained from solving the whole set of first-order conditions of the conventional model?

Published originally in Rivista Internazionale di Scienze Economiche e Commerciali, 32(1985), pp. 393–411, and reproduced with permission.