On the Microfoundation of Linear Oligopoly Demand

Research output: Working paperProfessional

182 Downloads (Pure)

Abstract

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.
Original languageEnglish
PublisherMaastricht University, Graduate School of Business and Economics
Number of pages13
Publication statusPublished - 28 Jan 2019

Publication series

SeriesGSBE Research Memoranda
Number004

JEL classifications

  • b40 - Economic Methodology: General
  • l10 - Market Structure, Firm Strategy, and Market Performance: General

Keywords

  • microfoundations
  • oligopoly theory
  • product differentiation
  • representative consumer models

Cite this

Bos, I., & Vermeulen, D. (2019). On the Microfoundation of Linear Oligopoly Demand. Maastricht University, Graduate School of Business and Economics. GSBE Research Memoranda, No. 004