AN OPERATIONAL THEORY OF OLIGOPOLY,

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Abstract:

A method has been developed for determining optimal price policies for an individual firm in an undifferentiated oligopoly without communication among the competitors. This method is operational It is based upon verifiable specifications about i the institutional mechanism underlying the consumnation of transactions, ii the content and extent of information available to market participants, and iii the nature of competition. It does not require an analysis of the subjective attitudes of competitors. Given the above specifications, there exist for an individual firm welldefined and statistically testable probability or transition probability functions for its sales these are parametrized by the price offered by the firm. An actual test has been successfully performed on artificially generated data. The model of transition probability has been shown to be a probabilistic version of the kinked demand theory of oligopoly. Also, the degree of stability of empirical probabilities is shown to be a reflection of the state of coordination in competition. Author

Author(s):
Guha, Dilip K. ; Sengupta, S.
Author Organization(s):
CASE INST OF TECH CLEVELAND OHIO
Supplementary Note:
Prepared under grant for The Busch Foundation.
Annotation:
An operational theory of oligopoly.
Pagination:
0132

Security Markings

DOCUMENT & CONTEXTUAL SUMMARY

Distribution:
Approved For Public Release

RECORD

Collection: TR
Identifying Numbers
Contract/Grant Number(s):
Nonr1141 11
 Subject Terms
Communities of Interest:
No COI(s) Identified
Descriptor(s):
(*OPERATIONS RESEARCH, ECONOMICS), (*ECONOMICS, OPERATIONS RESEARCH), COSTS, COMMERCE, OPTIMIZATION, INDUSTRIAL PRODUCTION, MATHEMATICAL MODELS, PROBABILITY, DECISION THEORY, STATISTICAL FUNCTIONS, STATISTICAL TESTS, THEORY, GAME THEORY
Keyword(s):
OLIGOPOLY
Report Date:
1943 Jan 01