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On the existence of Bayesian Cournot equilibrium

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  • Einy, Ezra
  • Haimanko, Ori
  • Moreno, Diego
  • Shitovitz, Benyamin

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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File URL: http://e-archivo.uc3m.es/bitstream/10016/663/1/we070603.pdf
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Bibliographic Info

Paper provided by Universidad Carlos III de Madrid in its series Open Access publications from Universidad Carlos III de Madrid with number info:hdl:10016/663.

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Handle: RePEc:ner:carlos:info:hdl:10016/663

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Keywords: Oligopoly; Incomplete information; Bayesian; Cournot; Equilibrium; Existence; Uniqueness;

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  1. Einy, Ezra & Haimanko, Ori & Moreno, Diego & Shitovitz, Benyamin, . "On the existence of Bayesian Cournot equilibrium," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/663, Universidad Carlos III de Madrid.
  2. Novshek, William., 1984. "On the Existence of Cournot Equilibrium," Working Papers 517, California Institute of Technology, Division of the Humanities and Social Sciences.
  3. Raith, Michael, 1996. "A General Model of Information Sharing in Oligopoly," Journal of Economic Theory, Elsevier, vol. 71(1), pages 260-288, October.
  4. Ezra Einy & Diego Moreno & Benyamin Shitovitz, 2002. "The Value Of Public Information In A Cournot Duopoly," Economics Working Papers we024617, Universidad Carlos III, Departamento de Economía.
  5. Sakai, Yasuhiro, 1985. "The value of information in a simple duopoly model," Journal of Economic Theory, Elsevier, vol. 36(1), pages 36-54, June.
  6. Lagerlöf, Johan N.M., 2003. "Insisting on a Non-negative Price: Oligopoly, Uncertainty, Welfare and Multiple Equilibria," CEPR Discussion Papers 3901, C.E.P.R. Discussion Papers.
  7. 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, vol. 18(3), pages 787-89, October.
  8. Einy, Ezra & Moreno, Diego & Shitovitz, Benyamin, . "Information advantage in cournot oligopoly," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/6168, Universidad Carlos III de Madrid.
  9. Vives, Xavier, 1984. "Duopoly information equilibrium: Cournot and bertrand," Journal of Economic Theory, Elsevier, vol. 34(1), pages 71-94, October.
  10. Johan N.M. Lagerlöf, 2006. "Equilibrium Uniqueness in a Cournot Model with Demand Uncertainty," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 0(1), pages 19.
  11. Vives, Xavier, 1990. "Nash equilibrium with strategic complementarities," Journal of Mathematical Economics, Elsevier, vol. 19(3), pages 305-321.
  12. Gal-Or, Esther, 1985. "Information Sharing in Oligopoly," Econometrica, Econometric Society, vol. 53(2), pages 329-43, March.
  13. Amir, Rabah, 1996. "Cournot Oligopoly and the Theory of Supermodular Games," Games and Economic Behavior, Elsevier, vol. 15(2), pages 132-148, August.
  14. Malueg, David A & Tsutsui, Shunichi O, 1998. "Oligopoly Information Exchange When Non-negative Price and Output Constraints May Bind," Australian Economic Papers, Wiley Blackwell, vol. 37(4), pages 363-71, December.
  15. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-77, November.
  16. Gal-Or, Esther, 1986. "Information Transmission-Cournot and Bertrand Equilibria," Review of Economic Studies, Wiley Blackwell, vol. 53(1), pages 85-92, January.
  17. 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.
  18. Vives, Xavier, 1988. "Aggregation of Information in Large Cournot Markets," Econometrica, Econometric Society, vol. 56(4), pages 851-76, July.
  19. Shapiro, Carl, 1986. "Exchange of Cost Information in Oligopoly," Review of Economic Studies, Wiley Blackwell, vol. 53(3), pages 433-46, July.
  20. Kukushkin, Nikolai S., 1994. "A fixed-point theorem for decreasing mappings," Economics Letters, Elsevier, vol. 46(1), pages 23-26, September.
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Citations

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Cited by:
  1. Richter, Jan, 2013. "Incomplete Information in Cournot Oligopoly: The Case of Unknown Production Capacities," EWI Working Papers 2013-1, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  2. Richter, Jan & Viehmann, Johannes, 2013. "The Value of Information in Explicit Cross-Border Capacity Auction Regimes in Electricity Markets," EWI Working Papers 2013-5, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  3. Robert R. Routledge, 2009. "On the existence of Bayesian Bertrand equilibrium," The School of Economics Discussion Paper Series 0917, Economics, The University of Manchester.
  4. Ezra Einy & Ori Haimanko & Diego Moreno & Benyamin Shitovitz, 2007. "On the Existence of Bayesian Cournot Equilibrium," Working Papers 0715, Ben-Gurion University of the Negev, Department of Economics.
  5. Routledge, Robert R., 2010. "Bertrand competition with cost uncertainty," Economics Letters, Elsevier, vol. 107(3), pages 356-359, June.

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