Toward a usable general theory of oligopoly

Summary This paper propounds a determinate and operational framework for the analysis of the oligopolistic firm's and industry's price-output equilibrium. It emphasizes the implicit collusion and restrained rivalry in the realistic market structure revealed by empirical investigators, and thereby takes a different route from the traditional Cournot-Stackelberg and game-theoretic approaches. It incorporates the multiobjective nature of the firm's decisionmaking, and draws upon nonlinear programming and parametric programming theory to offer a flexible framework to accommodate a wide variety of behavior patterns in such industries. Several simple examples employing fictional data are used to illustrate the models.