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| Volume 8, No. 1,
April 2009 |
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Constant Best-Response
Functions: Interpreting Cournot |
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Zivan Forshner |
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Department of Economics,
University of Haifa, Israel |
| Oz Shy |
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Research Department, Federal
Reserve Bank of Boston, U.S.A. |
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| Abstract |
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Following Amir and Grilo (1999), we
characterize a class of demand functions that generate constant
quantity best-response functions. We examine implications of
constant best-response functions for the invariance of equilibrium
outcomes with respect to the assumed market structure of quantity
games. We argue that, unlike the class of linear demand functions,
this class of demand functions supports the pure interpretation of
Cournot conjectures. |
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Key words:
constant best-response functions; Cournot equilibrium; Cournot conjectures; Stackelberg equilibrium |
| JEL
classification:
C72; D43 |
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