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On a foundation for Cournot equilibrium

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  • Alex Dickson

    ()
    (Keele University, Centre for Economic Research and School of Economic and Management Studies)

  • Roger Hartley

    (Department of Economics, University of Manchester)

Abstract

We show in the context of a bilateral oligopoly where all agents are allowed to behave strategically the unexpected result that when the number of buyers becomes large the outcomes in a strategic market game do not converge to those at the Cournot equilibrium. However, convergence to Cournot outcomes is restored if the game is sequential: sellers move simultaneously as do buyers, but the former always move before the latter. This suggests that the ability to commit to supply decisions is an essential feature of Cournot equilibrium.

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Bibliographic Info

Paper provided by Centre for Economic Research, Keele University in its series Keele Economics Research Papers with number KERP 2007/14.

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Length: 42 pages
Date of creation: Oct 2007
Date of revision:
Handle: RePEc:kee:kerpuk:2007/14

Note: Previously University of Manchester EDP 0638.
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Postal: Department of Economics, University of Keele, Keele, Staffordshire, ST5 5BG - United Kingdom
Phone: +44 (0)1782 584581
Fax: +44 (0)1782 717577
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Web page: http://www.keele.ac.uk/depts/ec/cer/
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Postal: Centre for Economic Research, Research Institute for Public Policy and Management, Keele University, Staffordshire ST5 5BG - United Kingdom
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Web: http://www.keele.ac.uk/depts/ec/cer/pubs_kerps.htm

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Keywords: Cournot competition; strategic market game; strategic foundation.;

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