Factor market effects upon product market equilibrium

Document Type

Article

Publication Date

1-1-1999

Abstract

Conventional duopoly models typically assume agents possess specific conjectures concerning other agents’ behavior. In this paper equilibrium conjectures are endogenous and are a result of a joint factor market and product market equilibrium. Factor markets affect product markets since potential managers or owners of firms engage in product market competition and compete for corporate control in labor or capital markets. The resulting factor and product market joint equilibrium (FPE) endogenizes conjectures and can thus potentially endogenize market structure. This approach provides economic rationales for both Stackelberg and consistent conjectural equilibria. © 1999 John Wiley & Sons, Ltd.

Publication Source (Journal or Book title)

Managerial and Decision Economics

First Page

37

Last Page

43

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