On the Microfoundation of Linear Oligopoly Demand-Reference-Cited by-同舟云学术

On the Microfoundation of Linear Oligopoly Demand

Published:2020-10-07 Issue:1 Volume:22 Page:1-15
ISSN:1935-1704
Container-title:The B.E. Journal of Theoretical Economics
language:en
Short-container-title:

Author:

Bos Iwan¹,Vermeulen Dries²

Affiliation:

1. Department of Organisation, Strategy and Entrepreneurship , Maastricht University . P.O. Box 616 , 6200 MD, Maastricht , The Netherlands

2. Department of Quantitative Economics , Maastricht University , Maastricht , The Netherlands

Abstract

Abstract We critically assess the representative consumer with quadratic aggregate utility function which forms the foundation of a well-known class of linear oligopoly demand structures. It is argued that this approach is problematic and redundant. Regarding the latter, we show how the same demand system can be derived directly from a population of heterogeneous buyers for any number of products. Welfare analyses based on aggregate demand is shown to be sensitive to the underlying microfoundation.

Publisher

Walter de Gruyter GmbH

Subject

General Economics, Econometrics and Finance

Link

https://www.degruyter.com/document/doi/10.1515/bejte-2019-0114/pdf

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