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On the existence of Bayesian Cournot equilibrium

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  • Ezra Einy

    ()

  • Ori Haimanko

    ()

  • Diego Moreno

    ()

  • Benyamin Shitovitz

    ()

Abstract

We show that even in very simple oligopolies with differential information a (Bayesian) Cournot equilibrium in pure strategies may not exist, or be unique. However, we find sufficient conditions for existence, and for uniqueness, of Cournot equilibrium in a certain class of industries. More general results arise when negative prices are allowed.

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Paper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we070603.

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Date of creation: Mar 2007
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Handle: RePEc:cte:werepe:we070603

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References

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  1. Einy, Ezra & Moreno, Diego & Shitovitz, Benyamin, 2002. "Information Advantage in Cournot Oligopoly," Journal of Economic Theory, Elsevier, Elsevier, vol. 106(1), pages 151-160, September.
  2. Raith, Michael, 1996. "A General Model of Information Sharing in Oligopoly," Journal of Economic Theory, Elsevier, Elsevier, vol. 71(1), pages 260-288, October.
  3. Lagerlöf Johan N.M., 2006. "Equilibrium Uniqueness in a Cournot Model with Demand Uncertainty," The B.E. Journal of Theoretical Economics, De Gruyter, De Gruyter, vol. 6(1), pages 1-6, December.
  4. Gal-Or, Esther, 1985. "Information Sharing in Oligopoly," Econometrica, Econometric Society, Econometric Society, vol. 53(2), pages 329-43, March.
  5. Vives, Xavier, 1990. "Nash equilibrium with strategic complementarities," Journal of Mathematical Economics, Elsevier, vol. 19(3), pages 305-321.
  6. Szidarovszky, F & Yakowitz, S, 1977. "A New Proof of the Existence and Uniqueness of the Cournot Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(3), pages 787-89, October.
  7. Einy, Ezra & Moreno, Diego & Shitovitz, Benyamin, 2003. "The value of public information in a Cournot duopoly," Games and Economic Behavior, Elsevier, Elsevier, vol. 44(2), pages 272-285, August.
  8. Lagerlöf, Johan N.M., 2003. "Insisting on a Non-negative Price: Oligopoly, Uncertainty, Welfare and Multiple Equilibria," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3901, C.E.P.R. Discussion Papers.
  9. Sakai, Yasuhiro, 1985. "The value of information in a simple duopoly model," Journal of Economic Theory, Elsevier, Elsevier, vol. 36(1), pages 36-54, June.
  10. Shlomit Hon-Snir & Benyamin Shitovitz & Menahem Spiegel, 2010. "Bayesian Equilibrium in a Public Good Economy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(2), pages 387-398, 04.
  11. Vives, Xavier, 1988. "Aggregation of Information in Large Cournot Markets," Econometrica, Econometric Society, Econometric Society, vol. 56(4), pages 851-76, July.
  12. Shapiro, Carl, 1986. "Exchange of Cost Information in Oligopoly," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 53(3), pages 433-46, July.
  13. Ezra Einy & Ori Haimanko & Diego Moreno & Benyamin Shitovitz, 2007. "On the existence of Bayesian Cournot equilibrium," Economics Working Papers we070603, Universidad Carlos III, Departamento de Economía.
  14. Gal-Or, Esther, 1986. "Information Transmission-Cournot and Bertrand Equilibria," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 53(1), pages 85-92, January.
  15. AMIR, Rabah, 1994. "Cournot Oligopoly and the Theory of Supermodular Games," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 1994013, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  16. Vives, Xavier, 1984. "Duopoly information equilibrium: Cournot and bertrand," Journal of Economic Theory, Elsevier, Elsevier, vol. 34(1), pages 71-94, October.
  17. Novshek, William., 1984. "On the Existence of Cournot Equilibrium," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 517, California Institute of Technology, Division of the Humanities and Social Sciences.
  18. Malueg, David A & Tsutsui, Shunichi O, 1998. "Oligopoly Information Exchange When Non-negative Price and Output Constraints May Bind," Australian Economic Papers, Wiley Blackwell, Wiley Blackwell, vol. 37(4), pages 363-71, December.
  19. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, Econometric Society, vol. 58(6), pages 1255-77, November.
  20. Kukushkin, Nikolai S., 1994. "A fixed-point theorem for decreasing mappings," Economics Letters, Elsevier, Elsevier, vol. 46(1), pages 23-26, September.
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Cited by:
  1. Richter, Jan, 2013. "Incomplete Information in Cournot Oligopoly: The Case of Unknown Production Capacities," EWI Working Papers, Energiewirtschaftliches Institut an der Universitaet zu Koeln 2013-1, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  2. Ezra Einy & Ori Haimanko & Diego Moreno & Benyamin Shitovitz, 2007. "On the Existence of Bayesian Cournot Equilibrium," Working Papers, Ben-Gurion University of the Negev, Department of Economics 0702, Ben-Gurion University of the Negev, Department of Economics.
  3. Richter, Jan & Viehmann, Johannes, 2014. "The value of information in explicit cross-border capacity auction regimes in electricity markets," Energy Policy, Elsevier, Elsevier, vol. 70(C), pages 74-84.
  4. Routledge, Robert R., 2010. "Bertrand competition with cost uncertainty," Economics Letters, Elsevier, Elsevier, vol. 107(3), pages 356-359, June.

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