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Structurally stable Nash equilibria in pure strategies for a model of monopolistic competition

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

I. Introduction

Game theory is now widely employed in various fields of economics. The most commonly used form of games is a finite-- player non-cooperative game, for which Nash (1950) provided the celebrated solution concept of an ...

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