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Both of these relatively frequent cases in oligopolistic industries result in prices that are above those that would rule in the absence of consonance, if we assume t h a t firms opt for a low-price option over the high-price option in the latter case. Such a course seems more likely in view of the concerns of firms to avoid customer resentment, avert antitrust suspicions, and to discourage entry into the industry. Under rivalrous consonance in target rate regimes prices may well go higher than in profit-maximizing regimes since the firm pays no goal penalties to do so, as is suggested by the cases above.

These structural/functional theorems of imprecise magnitude will be pursued in the theoretical and empirical work t h a t follows. Their deduction constitutes the substance of simulative theorizing. 5. THE STRUCTURE OF THE ANALYSIS The presentation of rivalrous consonance theory is structured at three levels of analysis. The first level is the determination of oligopolistic prices when each firm assumes its rivals' prices are fixed in choosing its optimal price. Models 1, 2, and 3 are analyzed at this simple level in Chapter 2.

The aggregate rivals' target deviation term will be lower, which implies that most rj have fallen. , implying Σ)*[ Oij SJ MRRji > 0. a. CHANGE IN P i WITH RISE IN Ci, MRRÜ < 0 a. b. CHANGE IN P i WITH RISE IN Ci, MRRÜ < 0 b. Si > 0 Implies Σθ^ SJ > 0 47 CHAPTER 2 48 to zero level at pi. C presents Case 1 where si > 0 and M R R Ü > 0, implying Ej^i 9ij MRRji < 0. A rise in Ci, therefore, lowers n and increases Si. Since M R R Ü > 0, pi must rise to elevate n , but this in turn induces the rival target deviation component to increase.

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