Abstract
The theory of games and the theory of oligopoly have a long connection. Cournot (1838) invented the non-co-operative equilibrium in the context of homogeneous products oligopoly. Nash (1951) generalised the Cournot equilibrium, widening its reach to non-co-operative games in general. Game theory deals, in the main, with decision situations in which relatively few agents interact and have their interests at least partly in opposition, making it reasonable that each agent will concern himself with trying to understand the behaviour of each rival agent. Oligopoly is the most obvious context in economics where the same circumstances prevail. Furthermore, game-theoretic thinking entered oligopoly with Cournot, roughly a century before game theory made a good start as a discipline. The non-co-operative equilibrium is often called the Cournot-Nash equilibrium in honour of its parentage.
My large debt to Larry Samuelson should be evident to anyone this paper. It is a pleasure to acknowledge it explicitly.
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© 1991 International Economic Association
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Friedman, J.W. (1991). The ‘Folk Theorem’ and Continuous Reaction Functions: A Synthesis. In: Arrow, K.J. (eds) Issues in Contemporary Economics. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-11573-0_10
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