Partially Mixed Duopoly and Oligopoly: Consistent Conjectural Variations Equilibrium (CCVE). Part 2

Abstract

In this paper, a model of partially mixed oligopoly with conjectured variations equilibrium (CVE) is studied. The agents make conjectures concerning the price variations depending upon their production output’s fluctuations. Existence and uniqueness results for the conjectured variations equilibrium (called an exterior equilibrium) is established for any collection of feasible conjectures. To deal with the concept of an interior (i.e., consistent) equilibrium, a consistency criterion for the influence coefficients is introduced and the existence theorem for the interior equilibrium (understood as a CVE with consistent conjectures) is established. As a base for the extension of the above-mentioned results to the case of non-differentiable demand functions, the behavior of the consistent conjectures as a function of a parameter representing the demand function’s derivative with respect to the market price is investigated.