Part (I) of this thesis is on the Cournot model. Our aDn
has been to collect together the known results on the Cournot model,
present them in a systematic manner and derive the results from
a single set of postulates. In the process we have corrected some
errors, generalised some results and discovered some new ones.
Part (II) is a brief review of the two main approaches to
oligopoly theory: (1) the Reaction Function approach (also known
as the conjectural variations approach, the classical approach or
the traditional approach); (2) the game-theoretic approach, particularly
the Super-Game approach of James Friedman. We show that the Reaction
Function approach leads either to inconsistency, or to implausible econom1C
results. We show that the Super-Game approach of James Friedman
suffers from several defects, notably lack of credibility.
In Part (III) we develop a new approach to oligopoly theory
that avoids the difficulties of the two standard approaches. We
propose a concept of credibility that promises to reduce the number
of a priori possible oligopoly solutions, thus strengthening the
predictive power of the theory.