Aggregation and Imperfect Competition: On the Existence of Equilibrium.

The authors present a new approach to the theory of imperfect competition and apply it to study price competition among differentiated products. The central result provides general conditions for existence and uniqueness of a pure-strategy price equilibrium given any number of firms producing any set of products. This includes products with multidimensional attributes. The authors' analysis covers location models, the characteristics approach, and probabilistic choice in a unified framework. To prove existence, they employ aggregation theorems due to A. Pr$8Ekopa (1971) and C. Borell (1975). A companion paper introduces these theorems and develops the application to super-majority voting rules. Copyright 1991 by The Econometric Society.