Natural monopoly equilibria: Nash and von Stackelberg solutions

Research output: Contribution to journalArticle

Abstract

This paper provides a game-theoretic analysis of price-sustainable industry configurations in natural monopoly. We show that the sustainable configuration is the unique Nash equilibrium, and that it is also von Stackelberg equilibrium if any firm has to fulfill all demand at the quoted price. Furthermore, given this assumption, even configurations that are not price-sustainable according to the contestability theory are Nash equilibria.

Original languageEnglish
Pages (from-to)135-139
Number of pages5
JournalJournal of Economics and Business
Volume46
Issue number2
DOIs
StatePublished - May 1994

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