Structurally Stable Nash Equilibria in Pure Strategies for a Model of Monopolistic Competition

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.