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. 137-144.
Download (72kB) | Preview
A reaction curve RC, also called reaction function or best-reply function, is the locus of optimal, i.e. profit-maximizing, 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|
|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
|Depositing User:||Nicola Giocoli|
|Date Deposited:||30. Sep 2011 19:18|
|Last Modified:||16. Feb 2013 20:36|
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), 488-511
Cournot A.A. 1971 , 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, 119-138.
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, 139-160.
Fulton M. 1997, “A graphical analysis of the Cournot-Nash and Stackelberg models”, Journal of Economic Education, 28 (1), 48-57.
Giocoli N. 2003, “Conjecturizing Cournot: the conjectural variations approach to duopoly theory”, History of Political Economy, 35 (2), 175-204
Kreps D. 1990, A Course in Microeconomic Theory, Harvester-Wheatsheaf.
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.