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A Course in Microeconomic Theory$
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David M. Kreps

Print publication date: 2020

Print ISBN-13: 9780691202754

Published to Princeton Scholarship Online: May 2021

DOI: 10.23943/princeton/9780691202754.001.0001

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Imperfect competition

Imperfect competition

(p.325) Chapter Ten Imperfect competition
A Course in Microeconomic Theory

David M. Kreps


This chapter explores models of imperfect competition. Firms in these models have rivals, and the actions of their rivals affect how well they do. But at the same time, firms are not price takers; when they optimize, they take into account how their actions affect the prices they face both directly and, through possible reactions of their rivals, indirectly. The chapter examines the classic models of duopoly with undifferentiated goods: Cournot, von Stackelberg, Bertrand, and kinked demand. It then discusses some of the many important issues that impinge on the basic models. The problems present the opportunity to move beyond informal discussion.

Keywords:   imperfect competition, firms, duopoly, undifferentiated goods, Cournot conjectures, von Stackelberg duopoly, Bertrand conjectures, kinked demand

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