Quasi-Competitive Equilibrium

Abstract

In previous chapters we have considered two extreme market forms—perfect competition and monopolistic behavior. Many markets, however, fall between these two extremes. Some companies are large and well endowed, and therefore have significant market power. Yet there are few of those fortunate ones. A larger group of less profitable firms compete for the part of the market not served by the large firms. As a result of these differences among firms, we do not have perfect competition. Rather, only a limited number of firms can compete successfully. In this chapter, we will determine how many profit-maximizing firms can be successful in a quasi-competitive market. In our model, we assume that there are two groups of firms in that market. The first group consists of Ni firms. Each of those firms has the same production technology to produce Q1 units of the product. Their production function is

$$ Q1 = A1*X{1^2} - ALPA1*X{1^3} $$

((1))

with A1 = 50 and ALPHA1 = 13 as fixed parameters.

There is no likelihood man can ever tap the power of the atom.

Robert Millikan, Nobel Laureate, Physics, 1923