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Existence of free entry equilibrium in aggregative games with asymmetric agents

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  • Okumura, Yasunori

Abstract

In this paper, we examine a free entry aggregative game where agents can be asymmetric. We show the existence of a pure strategy subgame perfect equilibrium of this game. The proof is a constructive one and therefore we provide a method to derive a subgame perfect equilibrium within a reasonable time.

Suggested Citation

  • Okumura, Yasunori, 2015. "Existence of free entry equilibrium in aggregative games with asymmetric agents," Economics Letters, Elsevier, vol. 127(C), pages 14-16.
    • Handle: RePEc:eee:ecolet:v:127:y:2015:i:c:p:14-16
    DOI: 10.1016/j.econlet.2014.12.018
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    References listed on IDEAS

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    1. Kotaro Suzumura & Kazuharu Kiyono, 1987. "Entry Barriers and Economic Welfare," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(1), pages 157-167.
    2. Martin Jensen, 2010. "Aggregative games and best-reply potentials," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(1), pages 45-66, April.
    3. Acemoglu, Daron & Jensen, Martin Kaae, 2013. "Aggregate comparative statics," Games and Economic Behavior, Elsevier, vol. 81(C), pages 27-49.
    4. Laffont, Jean-Jacques & Moreaux, Michel, 1983. "The Nonexistence of a Free Entry Cournot Equilibrium in Labor-Managed Economies," Econometrica, Econometric Society, vol. 51(2), pages 455-462, March.
    5. Javier M. López-Cuñat, 1999. "One-stage and two-stage entry Cournot equilibria," Investigaciones Economicas, Fundación SEPI, vol. 23(1), pages 115-128, January.
    6. William Novshek, 1980. "Cournot Equilibrium with Free Entry," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(3), pages 473-486.
    7. N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring.
    8. Corchon, Luis C. & Fradera, Isabel, 2002. "Comparative statics in Cournot free entry equilibrium," Mathematical Social Sciences, Elsevier, vol. 44(2), pages 155-168, November.
    9. Cornes, Richard & Hartley, Roger, 2012. "Fully aggregative games," Economics Letters, Elsevier, vol. 116(3), pages 631-633.
    10. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, December.
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    Cited by:

    1. Matsumura Toshihiro & Okumura Yasunori, 2017. "Privatization Neutrality Theorem in Free Entry Markets," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 17(2), pages 1-9, June.
    2. Krishnendu Ghosh Dastidar & Sugata Marjit, 2022. "Market size, entry costs and free entry Cournot equilibrium," Journal of Economics, Springer, vol. 136(2), pages 97-114, July.
    3. Okumura, Yasunori, 2015. "Volume and share quotas in Cournot competition," Economic Modelling, Elsevier, vol. 47(C), pages 137-144.
    4. Luis C. Corchón, 2021. "Aggregative games," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 12(1), pages 49-71, March.

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    More about this item

    Keywords

    Entry; Aggregative games; Cournot; Constructive proof;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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