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International Trade and Cournot Equilibrium: Existence, Uniqueness and Comparative Statics

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  • Collie, David

Abstract

This paper proves the existence and uniqueness of Cournot equilibrium in models of international trade under oligopoly. The existence of Cournot equilibrium is established without the usual assumption that profit functions are concave. Instead the proof uses a weaker "aggregate concavity" condition. A simple proof is used to establish the uniqueness of the equilibrium. And, the paper considers the implications of the assumptions, used to prove the existence and uniqueness of the equilibrium, on the comparative static results. Copyright 1992 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

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  • Collie, David, 1992. "International Trade and Cournot Equilibrium: Existence, Uniqueness and Comparative Statics," Bulletin of Economic Research, Wiley Blackwell, vol. 44(1), pages 55-66, January.
    • Handle: RePEc:bla:buecrs:v:44:y:1992:i:1:p:55-66
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    1. Brander, James & Krugman, Paul, 1983. "A 'reciprocal dumping' model of international trade," Journal of International Economics, Elsevier, vol. 15(3-4), pages 313-321, November.
    2. William Novshek, 1985. "On the Existence of Cournot Equilibrium," Review of Economic Studies, Oxford University Press, vol. 52(1), pages 85-98.
    3. Brander, James A. & Spencer, Barbara J., 1984. "Trade warfare: Tariffs and cartels," Journal of International Economics, Elsevier, vol. 16(3-4), pages 227-242, May.
    4. Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
    5. 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 787-789, October.
    6. Charles D. Kolstad & Lars Mathiesen, 1987. "Necessary and Sufficient Conditions for Uniqueness of a Cournot Equilibrium," Review of Economic Studies, Oxford University Press, vol. 54(4), pages 681-690.
    7. Brander, James A., 1981. "Intra-industry trade in identical commodities," Journal of International Economics, Elsevier, vol. 11(1), pages 1-14, February.
    8. Myles, Gareth D, 1991. "Tariff Policy and Imperfect Competition," The Manchester School of Economic & Social Studies, University of Manchester, vol. 59(1), pages 24-44, March.
    9. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
    10. Seade, Jesus, 1980. "The stability of cournot revisited," Journal of Economic Theory, Elsevier, vol. 23(1), pages 15-27, August.
    11. Partha Dasgupta & Eric Maskin, 1986. "The Existence of Equilibrium in Discontinuous Economic Games, I: Theory," Review of Economic Studies, Oxford University Press, vol. 53(1), pages 1-26.
    12. Partha Dasgupta & Eric Maskin, 1986. "The Existence of Equilibrium in Discontinuous Economic Games, II: Applications," Review of Economic Studies, Oxford University Press, vol. 53(1), pages 27-41.
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    Cited by:

    1. Collie, David, 1991. "Export subsidies and countervailing tariffs," Journal of International Economics, Elsevier, vol. 31(3-4), pages 309-324, November.
    2. R Cornes & R Hartley, 2005. "The Geometry of Aggregative Games," The School of Economics Discussion Paper Series 0514, Economics, The University of Manchester.
    3. Udo Broll & Peter Welzel & Kit Wong, 2009. "Export and Strategic Currency Hedging," Open Economies Review, Springer, vol. 20(5), pages 717-732, November.
    4. Guerrazzi, Marco, 2013. "Asymptotic Relations in Cournot’s Quantity Game: Some International Trade Implications - Relazioni asintotiche nel gioco di Cournot: alcune implicazioni per il commercio internazionale," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 66(1), pages 47-56.
    5. Broll, Udo & Wahl, Jack E. & Wessel, Christoph, 2008. "Export production, hedging exchange rate risk: the duopoly case," Dresden Discussion Paper Series in Economics 06/08, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    6. Udo Broll & Peter Welzel & Kit Pong Wong, 1999. "Strategic Hedging," Working Paper Series B 1999-04, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultïät.
    7. Aidan Hollis, 2003. "Industrial Concentration, Output, and Trade: An Empirical Exploration," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(2), pages 103-119, March.
    8. M. Kunizaki, 1992. "The Effects of a Commodity Tax in an International Oligopoly Model," Economics Discussion / Working Papers 92-25, The University of Western Australia, Department of Economics.

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