AN OPERATIONAL THEORY OF OLIGOPOLY.

The work reported stems from an attempt to derive operationally meaningful propositions that may be useful to the management of a firm selling an undifferentiated product in conditions of oligopoly. It avoids the game-theoretic constructs on the one hand, and the notions of reaction functions and conjectural variations on the other it only builds the minimum necessary frame work of concepts and constructs for the purposes of decision-making. Given the structure of competition that is, who competes over what and with what means, the organization of the market that is, the institutional setup for the consummation of a transaction, and the nature of information available to buyers and sellers, it is demonstrated that one can derive the probability distribution of demand. This demand is demand as seen from the viewpoint of the individual firm it is parametrized by the firms own price-offerings. The distribution, so derived, is further refined so as to be applicable in the derivation of the optimal level and course of price-setting. The level is relevant for the short-run decisions, while the course is relevant to the long-run decisions stretching over more than one period. Author