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Volume 8, No. 1,
April 200
9
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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
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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;
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Cournot conjectures; Stackelberg
equilibrium
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JEL classification
:
C72; D43
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