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A note on Cournot equilibrium with positive price

Author

Listed:
  • Bruno Badia

    (SUNY at Stony Brook)

  • Yair Tauman

    (SUNY at Stony Brook and Arison School of Business, IDC Herzliya, Israel)

  • Biligbaatar Tumendemberel

    (SUNY at Stony Brook)

Abstract

Consider an oligopoly in which firms compete in quantity, the market inverse demand is strictly decreasing (on the set of quantities for which the price is positive), twice differentiable and log-concave, and each of the firms has nondecreasing, twice differentiable cost of production (not necessarily convex). We extend previous literature on the existence of Cournot equilibrium by showing that, under additional mild assumptions, Cournot equilibrium with positive price is unique. This also holds if the costs are piecewise differentiable, nondecreasing, and convex with a finite number of kinks. Furthermore, if at least one firm incurs positive cost whenever the industry aggregate output implies zero market price, then the equilibrium is unique and the corresponding price is positive.

Suggested Citation

  • Bruno Badia & Yair Tauman & Biligbaatar Tumendemberel, 2014. "A note on Cournot equilibrium with positive price," Economics Bulletin, AccessEcon, vol. 34(2), pages 1229-1234.
  • Handle: RePEc:ebl:ecbull:eb-14-00407
    as

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    References listed on IDEAS

    as
    1. William Novshek, 1985. "On the Existence of Cournot Equilibrium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(1), pages 85-98.
    2. Van Long, Ngo & Soubeyran, Antoine, 2000. "Existence and uniqueness of Cournot equilibrium: a contraction mapping approach," Economics Letters, Elsevier, vol. 67(3), pages 345-348, June.
    3. Amir, R., 1996. "Cournot oligopoly and theory of supermodular games," LIDAM Reprints CORE 1228, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Amir, Rabah, 1996. "Cournot Oligopoly and the Theory of Supermodular Games," Games and Economic Behavior, Elsevier, vol. 15(2), pages 132-148, August.
    5. Gérard Gaudet & Stephen W. Salant, 1991. "Uniqueness of Cournot Equilibrium: New Results From Old Methods," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 399-404.
    6. Szidarovszky, F. & Yakowitz, S., 1982. "Contributions to Cournot oligopoly theory," Journal of Economic Theory, Elsevier, vol. 28(1), pages 51-70, October.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ma, Siyu & Sen, Debapriya & Tauman, Yair, 2022. "Optimal patent licensing: from three to two part tariffs," MPRA Paper 111624, University Library of Munich, Germany.
    2. Sen, Debapriya & Tauman, Yair, 2018. "Patent licensing in a Cournot oligopoly: General results," Mathematical Social Sciences, Elsevier, vol. 96(C), pages 37-48.
    3. Stefano Colombo & Siyu Ma & Debapriya Sen & Yair Tauman, 2021. "Equivalence between fixed fee and ad valorem profit royalty," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(5), pages 1052-1073, October.
    4. Bruno D. Badia, 2019. "Patent Licensing and Technological Catch-Up in a Heterogeneous Duopoly," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(2), pages 287-300, September.

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    More about this item

    Keywords

    Cournot game; Cournot equilibrium; existence; uniqueness; positive price;
    All these keywords.

    JEL classification:

    • L0 - Industrial Organization - - General
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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