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Equilibrium Uniqueness in a Cournot Model with Demand Uncertainty

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Author Info
Johan N.M. Lagerlöf (Royal Holloway, University of London; and CEPR)

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Abstract

If Cournot oligopolists face uncertainty about the intercept of a linear demand function and if the realized market price must be non-negative, then expected demand becomes convex, which can create a multiplicity of equilibria. This note shows that if the distribution of the demand intercept has a monotone hazard rate and if another, rather weak, assumption is satisfied, then uniqueness of equilibrium is guaranteed.

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File URL: http://www.bepress.com/cgi/viewcontent.cgi?article=1333&context=bejte
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Publisher Info
Article provided by Berkeley Electronic Press in its journal The B.E. Journal of Theoretical Economics.

Volume (Year): topics.6 (2006)
Issue (Month): 1 ()
Pages:
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Handle: RePEc:bpj:bejtec:v:topics.6:y:2006:i:1:n:19

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Web page: http://www.bepress.com/bejte

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Related research
Keywords: Cournot model; non-negativity constraint; demand uncertainty; unique equilibrium;

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Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

References listed on IDEAS
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  1. Novshek, William, 1985. "On the Existence of Cournot Equilibrium," Review of Economic Studies, Blackwell Publishing, vol. 52(1), pages 85-98, January. [Downloadable!] (restricted)
    Other versions:
  2. Amir, Rabah, 1996. "Cournot Oligopoly and the Theory of Supermodular Games," Games and Economic Behavior, Elsevier, vol. 15(2), pages 132-148, August. [Downloadable!] (restricted)
    Other versions:
  3. Lagerlöf, Johan N.M., 2003. "Insisting on a Non-negative Price: Oligopoly, Uncertainty, Welfare and Multiple Equilibria," CEPR Discussion Papers 3901, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
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This page was last updated on 2009-12-17.

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