Giocoli, Nicola (2008): Reaction curves. Published in: Famous Figures and Diagrams in Economics, edited by Mark Blaug and Peter J. Lloyd, Edward Elgar, Cheltenham (UK), (2010): pp. 137144.

PDF
MPRA_paper_33809.pdf Download (72kB)  Preview 
Abstract
A reaction curve RC, also called reaction function or bestreply function, is the locus of optimal, i.e. profitmaximizing, actions that a firm may undertake for any given action chosen by a rival firm. The RC diagram is the standard tool for the graphical analysis of duopoly. In the diagram the market equilibrium is at the intersection of the RCs, one for each firm. The commonest case of RC diagram is that of the Cournot duopoly model.
Item Type:  MPRA Paper 

Original Title:  Reaction curves 
Language:  English 
Keywords:  reaction curves; duopoly; Cournot 
Subjects:  B  History of Economic Thought, Methodology, and Heterodox Approaches > B1  History of Economic Thought through 1925 > B10  General L  Industrial Organization > L1  Market Structure, Firm Strategy, and Market Performance > L13  Oligopoly and Other Imperfect Markets C  Mathematical and Quantitative Methods > C7  Game Theory and Bargaining Theory > C70  General 
Item ID:  33809 
Depositing User:  Nicola Giocoli 
Date Deposited:  30. Sep 2011 19:18 
Last Modified:  16. Feb 2013 20:36 
References:  Amoroso L. 1921, Lezioni di Economia Matematica, Bologna: Zanichelli Bowley A.L. 1924, The Mathematical Groundwork of Economics, Oxford: OUP. Bulow J. Geanakoplos J. and Klemperer P.D. 1985, “Multimarket oligopoly: strategic substitutes and complements”, Journal of Political Economy 93 (3), 488511 Cournot A.A. 1971 [1838], Researches into the Mathematical Principles of the Theory of Wealth, New York: Augustus M. Kelley Publishers. Fellner W. 1949, Competition among the few, New York: A.A. Knopf. Fisher I. 1898, “Cournot and mathematical economics”, Quarterly Journal of Economics, 12, 119138. Friedman J. 1977, “Cournot, Bowley, Stackelberg and Fellner, and the evolution of the reaction function”, in: Balassa B. & Nelson R. (eds.), Economic Progress, Private Values and Public Policy: Essays in Honor of William Fellner, Amsterdam: NorthHolland, 139160. Fulton M. 1997, “A graphical analysis of the CournotNash and Stackelberg models”, Journal of Economic Education, 28 (1), 4857. Giocoli N. 2003, “Conjecturizing Cournot: the conjectural variations approach to duopoly theory”, History of Political Economy, 35 (2), 175204 Kreps D. 1990, A Course in Microeconomic Theory, HarvesterWheatsheaf. Martin S. 2002, Advanced Industrial Economics. Second Edition, Oxford: Blackwell Shubik M. 1959, Strategy and Market Structure. Competition, Oligopoly and the Theory of Games, New York: John Wiley & Sons. 
URI:  http://mpra.ub.unimuenchen.de/id/eprint/33809 