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Spence (1984) - Cost Reduction Competition And Industry Performance (view source)
Revision as of 18:37, 3 December 2010
, 18:37, 3 December 2010no edit summary
The '''benefits''' from selling <math>x \;</math> units are <math>B(x)\;</math>, and the '''inverse demand''' is <math>B'(x)\;</math>.
Let <math>x_i(z)\;</math> and <math>x(z)=\sum_i x_i(z)\;</math> be the '''equilibrium'''.
As the firm takes the <math>M_j\;</math> of its rivals as given, it maximizes <math>V^i\;</math> wrt <math>M_i\;</math> by setting:
:<math>E_i^i + \theta \sumsum_{j \ne i} E_j^i = (1-s)\;</math>
