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The Dynamics of Duopoly Output Games Involving Cournot and Related Best‐Response Strategies

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  • JOHN A. RICKARD

Abstract

The paper considers a variety of perfect information duopoly games involving the Cournot and related best‐response strategies. Firms record their output at the end of each business period. At the beginning of a new period they have to plan their new output; they do so in an attempt to maximize their profits. The importance of discrete time and the resulting time interval between successive outputs is discussed. The difference equations appropriate to the various games are solved exactly, and it is shown that there is always a stable approach to equilibrium at the Cournot point. The convergence of the solutions is discussed.

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  • John A. Rickard, 1979. "The Dynamics of Duopoly Output Games Involving Cournot and Related Best‐Response Strategies," The Economic Record, The Economic Society of Australia, vol. 55(1), pages 68-75, March.
    • Handle: RePEc:bla:ecorec:v:55:y:1979:i:1:p:68-75
    DOI: 10.1111/j.1475-4932.1979.tb02204.x
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    References listed on IDEAS

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    1. Osborne, D K, 1971. "The Duopoly Game: Output Variations," American Economic Review, American Economic Association, vol. 61(4), pages 538-560, September.
    2. R. D. Theocharis, 1960. "On the Stability of the Cournot Solution on the Oligopoly Problem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 27(2), pages 133-134.
    3. Franklin M. Fisher, 1961. "The Stability of the Cournot Oligopoly Solution: The Effects of Speeds of Adjustment and Increasing Marginal Costs," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 28(2), pages 125-135.
    4. Alexander Henderson, 1954. "The Theory of Duopoly," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 68(4), pages 565-584.
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