Inferring the strategy space from market outcomes

In this paper we show that, if demand varies stochastically, and firms compete after the realization of demand shocks, the strategy space may be inferred from market evidence. The key idea is that, in equilibrium, each firm acts as a monopolist, choosing the optimal price-quantity combination from a residual demand curve determined by a given observation of market demand and the (equilibrium) strategies of the other firms.


Issue Date:
Jan 17 2013
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/151206
Total Pages:
10
JEL Codes:
L11
Series Statement:
Risk and Uncertainty Program
R13/1




 Record created 2017-04-01, last modified 2017-08-27

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)