WHAT DOES AN OLIGOPOLY MAXIMIZE

A monopolist maximizes a well defined objective function, monetary pro fit. In a competitive industry, although each individual pursues selfi sh objectives, the market behaves as if an agent were maximizing an ob jective function, social welfare. Can we say the same for an oligopoly ? Do firms pursuing selfish objectives and behaving strategically act as if an agent were maximizing a 'fictitious'-objective function? Nece ssary and sufficient conditions for Nash equilibria of static and stat e-space games to be observationally equivalent to single optimization problems are derived. Nash equilibria of the game that are not maxima of the function are shown to be generically unstable.