We critically assess the representative consumer model that forms the foundation of a well-known class of linear oligopoly demand structures. It is argued that this approach has several limitations. We present an alternative microeconomic foundation by deriving the same demand system directly from a population of heterogeneous buyers. Our approach can be easily adapted to different demand specifications.
|Series||GSBE Research Memoranda|
- b40 - Economic Methodology: General
- l10 - Market Structure, Firm Strategy, and Market Performance: General
- oligopoly theory
- product differentiation
- representative consumer models