Thursday, February 6, 2014
Naoto Jinji (Kyoto University) offers Comparative Statics for Oligopoly: A Generalized Result.
ABSTRACT: We perform comparative statics for a general model of asymmetric oligopoly and derive a concise formula for the response of one firm to a marginal change in its rival’s strategic variable, taking into account the responses of all other firms. We obtain the conditions under which the sign of this response coincides with that of the mixed second-order partial derivative of the firm’s payoff function. We then propose a distinction between gross and net strategic relationships (i.e., strategic substitute and complement).