Limited knowledge of demand and oligopoly equilibria (Q1079468): Difference between revisions

The authors deal with a problem posed by \textit{J. Roberts} and \textit{H. Sonnenschein} [Econometrica 45, 101-113 (1977; Zbl 0352.90019)]. The authors show how the existence of equilibrium in a typical model of oligopoly or monopolistic competition, can be proved without imposing any restrictions on the shape of the demand functions, which is a necessity for most theorems dealing with this issue. Their paper consists of two parts. In Part 2 the existence theorem is proved within a general game theoretic framework. In Part 3, the results of Part 2 are applied to a model of oligopoly with differentiated products. Proposition 2 of Section 3 is of main interest. It states that, ''There exists an equilibrium at which each firm makes positive profits''. The proposition is an application of Theorem 1 of Part 2. The significance of these results lies in the fact that they hold without any restrictions being placed on the shape of the demand functions.