The crux of Cournot and Bertrand theory of industrial relationship is based on zero\nconjectural variation in output and Prices. The two theories assume that firms form constant\nexpectations about their rival�s reaction during output and price competition. This study\nexamined the validity of zero conjectural variation hypotheses within the context of the\ncompetition in Nigerian sugar industry. Using a two-stage least square analogy and data of\nwholesale sugar prices between January 2007 and June 2014, the study examined the\ninterrelationships in the firms� price and output competition. Evidence from the study showed\npositive conjectural variation among the sugar firms, suggesting that output and price of rival\nfirms varied with competition. The strong interdependency among the sugar firms suggests a\ncontinued long run competition and stable price in the industry.
Loading....