Oligopoly Pricing: Old Ideas and New Tools

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MIT Press, 2001 - Business & Economics - 425 pages
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The "oligopoly problem"--the question of how prices are formed when the market contains only a few competitors--is one of the more persistent problems in the history of economic thought. In this book Xavier Vives applies a modern game-theoretic approach to develop a theory of oligopoly pricing. Vives begins by relating classic contributions to the field--including those of Cournot, Bertrand, Edgeworth, Chamberlin, and Robinson--to modern game theory. In his discussion of basic game-theoretic tools and equilibrium, he pays particular attention to recent developments in the theory of supermodular games. The middle section of the book, an in-depth treatment of classic static models, provides specialized existence results, characterizations of equilibria, extensions to large markets, and an analysis of comparative statics with a view toward applied work. The final chapters examine commitment issues, entry, information transmission, and collusion using a variety of tools: two-stage games, the modeling of competition under asymmetric information and mechanism design theory, and the theory of repeated and dynamic games, including Markov perfect equilibrium and differential games.


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Oligopoly Theory and Modern
Game Theory Tools 11
Summary 69
Foundations of Partial Equilibrium Analysis 75
Consumer Surplus Analysis 85
The Cournot Model 93
Summary 112
Equilibria 154
Product Selection and Complementary Products 176
Summary 177
Conjectures Reactions and Commitment 185
Summary 219
Competition with Asymmetric Information 225
Repeated Interaction and Dynamics 301
Epilogue 353

Summary 138

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About the author (2001)

Xavier Vives is Director of the Institut d'AnÓlisi Econ˛mica, Barcelona.

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