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Cournot Competition on a Network of Markets and Firms

Author

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  • Rahmi Ilkiliç

    (Maastricht University)

Abstract

Suppose markets and firms are connected in a bi-partite network, where firms can only supply to the markets they are connected to. Firms compete a la Cournot and decide how much to supply to each market they have a link with. We assume that markets have linear demand functions and firms have convex quadratic cost functions. We show there exists a unique equilibrium in any given network of firms and markets. We provide a formula which expresses the quantities at an equilibrium as a function of a network centrality measure.

Suggested Citation

  • Rahmi Ilkiliç, 2009. "Cournot Competition on a Network of Markets and Firms," Working Papers 2009.32, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2009.32
    as

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    References listed on IDEAS

    as
    1. Corominas-Bosch, Margarida, 2004. "Bargaining in a network of buyers and sellers," Journal of Economic Theory, Elsevier, vol. 115(1), pages 35-77, March.
    2. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
    3. Leo Katz, 1953. "A new status index derived from sociometric analysis," Psychometrika, Springer;The Psychometric Society, vol. 18(1), pages 39-43, March.
    4. Andris Piebalgs, 2006. "Green paper: A European strategy for sustainable, competitive and secure energy," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(02), pages 8-20, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Cournot Markets; Networks; Nash Equilibrium; Centrality Measures;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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