On Adjustment Costs and the Stability of Equilibria

S-Tier
Journal: Review of Economic Studies
Year: 1985
Volume: 52
Issue: 4
Pages: 575-591

Score contribution per author:

8.043 = (α=2.01 / 1 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

In practice one does not expect conflicting agents to move instantaneously to an equilibrium. Instead the final equilibrium is often the consequence of "disequilibrium dynamics". This paper, through the use of local game theory, introduces a general framework for disequilibrium dynamics based on the existence of adjustment costs. The analysis is presented within the context of oligopoly theory and shows that the existence of adjustment costs will in many cases result in a unique equilibrium at which market shares are inversely proportional to these costs. This paper also introduces two new solution concepts for n-person normal form games.

Technical Details

RePEc Handle
repec:oup:restud:v:52:y:1985:i:4:p:575-591.
Journal Field
General
Author Count
1
Added to Database
2026-01-25