This paper shows that there are serious problems with matrix inversion of firm-level demand systems. When firms sell differentiated, imperfect substitutes, matrix inversion does not control for the nature of the product when the number of firms is permitted to expand beyond duopoly. Under these...

The classification of markets according to the nature of competition among firms is one of the fundamental pillars of microeconomics. The use of firm-level cross-price elasticity for this purpose was first proposed by Kaldor in 1934. This was followed by a lively debate with contributions from...

This paper provides a means for properly comparing demand and inverse demand for a product when the number of firms in the analysis is expanded beyond the duopoly case. To do this, first an index for the ease of substitution was derived for inverse demand systems, and then demand systems, that...

This paper explores the impact on firm-level demands under quantity competition tied to changes in the number of firms, product differentiation, and product group elasticity under price competition. It appears this deserves more attention. Some simple numerical analysis shows that inverse...

The first part of the paper reviews an analytical method for inverting demand in price competition to find the corresponding inverse demand under quantity competition. The method yields a simple function relating demand elasticities with inverse demand elasticities. The second part of the paper...

Current neoclassical microeconomic theory of rational consumer behavior affirms a unique consumer price-quantity relationship under conditions associated with monopolistic competition. Inverse demand will be just as own-price elastic as demand in the neighborhood of the limit state, while demand...