Simple Dynamic OligopolyCurtis Eberwein and Ted ToWe construct a model of dynamic oligopoly. In our model, current consumption decisions affect utility in the future, creating an intertemporal link in the consumer's maximization problem. Thus future demand depends on the current price and firms must take this into account when making their decisions. In equilibrium, prices follow a dynamic stochastic process in which the current price depends on past prices and random disturbances and have a tendency to revert to the "long run expected price." This reversion is monotonic if current and future consumption behave as substitutes and oscillatory if they behave as complements.JEL classification: C73, D21, D43
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