On a foundation for Cournot equilibrium

A. Dickson; R. Hartley

On a foundation for Cournot equilibrium

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Abstract

We show in the context of a bilateral oligopoly where all agents are allowed to behave strategically the unexpected result that when the number of buyers becomes large the outcomes in a strategic market game do not converge to those at the Cournot equilibrium. However, convergence to Cournot outcomes is restored if the game is sequential: sellers move simultaneously as do buyers, but the former always move before the latter. This suggests that the ability to commit to supply decisions is an essential feature of Cournot equilibrium.

Original language	English
Number of pages	33
Publication status	Published - 2007
Event	European Economic Association and the Econometric Society European Meetings (EEA-ESEM) 2006 - Vienna, Austria Duration: 24 Aug 2006 → 28 Aug 2006

Conference

Conference	European Economic Association and the Econometric Society European Meetings (EEA-ESEM) 2006
City	Vienna, Austria
Period	24/08/06 → 28/08/06

Keywords

Cournot competition
strategic market game
strategic foundation
oligopoly

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AU - Hartley, R.

PY - 2007

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N2 - We show in the context of a bilateral oligopoly where all agents are allowed to behave strategically the unexpected result that when the number of buyers becomes large the outcomes in a strategic market game do not converge to those at the Cournot equilibrium. However, convergence to Cournot outcomes is restored if the game is sequential: sellers move simultaneously as do buyers, but the former always move before the latter. This suggests that the ability to commit to supply decisions is an essential feature of Cournot equilibrium.

AB - We show in the context of a bilateral oligopoly where all agents are allowed to behave strategically the unexpected result that when the number of buyers becomes large the outcomes in a strategic market game do not converge to those at the Cournot equilibrium. However, convergence to Cournot outcomes is restored if the game is sequential: sellers move simultaneously as do buyers, but the former always move before the latter. This suggests that the ability to commit to supply decisions is an essential feature of Cournot equilibrium.

KW - Cournot competition

KW - strategic market game

KW - strategic foundation

KW - oligopoly

M3 - Paper

T2 - European Economic Association and the Econometric Society European Meetings (EEA-ESEM) 2006

Y2 - 24 August 2006 through 28 August 2006

ER -

On a foundation for Cournot equilibrium

Abstract

Conference

Keywords

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Cite this