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Intertemporal Non-separability and Dynamic Oligopoly

Author

Listed:
  • Curtis Eberwein

    (Ohio State University)

  • Ted To

    (Bureau of Labor Statistics)

Abstract

We construct a framework for modeling dynamic Cournot oligopoly. We consider models where utility maximizing consumers give rise to demand functions that depend on current and prior period prices. Future demand depends on the current price and consumers, and firms must take this into account when making their decisions. Focusing on problems that yield dynamic demand functions that are linear in current and prior period price, we characterize the unique Markov perfect equilibrium in linear strategies. We then demonstrate the applicability of our framework through a series of practical examples.

Suggested Citation

  • Curtis Eberwein & Ted To, 2018. "Intertemporal Non-separability and Dynamic Oligopoly," Dynamic Games and Applications, Springer, vol. 8(2), pages 232-253, June.
    • Handle: RePEc:spr:dyngam:v:8:y:2018:i:2:d:10.1007_s13235-017-0220-z
    DOI: 10.1007/s13235-017-0220-z
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    References listed on IDEAS

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    More about this item

    Keywords

    Dynamic oligopoly; Durable goods; Habit persistence; Inventories;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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