| Sumario: | Monopolistic price setting and equilibrium have had quite a long history in economics but still most contributions to general equilibrium theory continue to view the firm as a price taker. Recently a researcher, noticing that "there is no one left over whose job is to make a decision on price" advocated a more realistic approach to price determination with firms behaving monopolistically and stressed particularly the relation between monopolistic and out-of-equilibrium behaviour. Monopolistic price setting was incorporated for the first time in a general equilibrium model in a brilliant paper by researcher T. Negishi. In this article, the author shall retain a basic feature of Negishi's paper: the perceived demand curve. The perceived demand curve gives the maximum quantity of a monopolized good that the monopolist thinks he can sell as a function of his price, given his market observations. Such a subjective perception is clearly much more realistic than the assumption that the monopolist knows the "true" demand curve facing him. So, each time the monopolist has to make a price decision, he re-estimates his perceived demand curve as a function of what he observes (notably his maximal possible sales) and then chooses the prices of the goods he controls.
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