Price increase and stability with new entries in Cournot markets
AbstractIt is widely accepted in the literature about the classical Cournot oligopoly model that the loss of quasi–competitiveness is linked, in the long run as new firms enter the market, to instability of the equilibrium. In this paper, though, we present a model in which a stable unique symmetric equilibrium is reached for any number of oligopolists as industry price increases with each new entry. Consequently, the suspicion that non–quasi–competitiveness implies, in the long run, instability is proved false.
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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 646.
Date of creation: Oct 2002
Date of revision: Jan 2012
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Cournot equilibrium; non-cooperative oligopoly; quasi-competitiveness; stability;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
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