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Seoul Journal of Economics - Vol. 14 , No. 4
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Seoul Journal of Economics - Vol. 14, No. 4, pp. 50-69
Abbreviation: SJE
ISSN: 1225-0279 (Print)
Print publication date 30 Nov 2001

Structurally Stable Nash Equilibria in Pure Strategies for a Model of Monopolistic Competition
Sung Hyun Kim
Korea Information Society Development Institute (KISDI), 1-1 Juam-dong, Kwachun, Kyunggi-do, 427-710, Republic of Korea, Tel: +82-2-570-4220, Fax: +82-2-570-4169 (sungkim@kisdi.re.kr)

JEL Classification: C72, D43

Abstract

A model of monopolistically competitive industry is formulated using the theory of large games. We show that an equilibrium exists for the game and that equilibrium correspondence is upper hemi-continuous. The model's implications are discussed, especially on existence and characteristics of structurally stable equilibria and on the relationship to Kumar and Satterthwaite's (1985) model.

Keywords: Large games, Monopolistic competition, Continuity, Stability
Acknowledgments

The research reported in this paper first began as a chapter of my Ph.D dissertation at the Johns Hopkins University. I thank M. Ali Khan and H. Peyton Young for inspiration and encouragement. I also thank an anonymous referee for helpful and constructive comments. All errors are solely mine.

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