In an intertemporal general equilibrium framework, we compare a Cournot equilibrium to the Walras equilibrium. The Cournot agents trade and invest less than the Walras agents. This generates an ineffciency which does not vanish as the number of Cournot agents tends to infinity. A larger number of strategic Cournot agents implies that the amount of trade (relative to their aggregate consumption) increases (i.e., moving towards the Walrasian amount), but their investment (relative to the stock) decreases (i.e., moving away from the Walrasian amount).
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Paper provided by Arizona State University, Department of Economics in its series Working Papers with number
97/13.
Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection D90 - Microeconomics - - Intertemporal Choice and Growth - - - General
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Datta, Manjira, 1997.
"Externalities and Price Dynamics,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 587-603, August.