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Revealed Preference Tests of the Cournot Model
Author(s) -
Carvajal Andrés,
Deb Rahul,
Fenske James,
Quah John K.H.
Publication year - 2013
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.3982/ecta10175
Subject(s) - cournot competition , revealed preference , preference , nonparametric statistics , economics , consumption (sociology) , econometrics , microeconomics , mathematical economics , social science , sociology
The aim of this paper is to develop revealed preference tests for Cournot equilibrium. The tests are akin to the widely used revealed preference tests for consumption, but have to take into account the presence of strategic interaction in a game‐theoretic setting. The tests take the form of linear programs, the solutions to which also allow us to recover cost information on the firms. To check that these nonparametric tests are sufficiently discriminating to reject real data, we apply them to the market for crude oil.