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Bayesian Nash equilibrium in “linear” Cournot models with private information about costs

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  • Sjaak Hurkens

Abstract

type="main" xml:lang="en"> Calculating closed-form solutions of general Cournot models where firms have private information about costs is very cumbersome. Most authors therefore consider linear demands and constant marginal costs. However, within this framework, the non-negativity constraint on prices (and quantities) has not been properly dealt with and the correct calculation of all Bayesian Nash equilibria is more complicated than expected. Moreover, multiple symmetric and interior Bayesian equilibria may exist for an open set of parameters. The reason for this is that linear inverse demand is not really linear, since there is a kink at zero price: P ( Q ) = max { a − bQ , 0 } rather than P ( Q ) = a − bQ .

Suggested Citation

  • Sjaak Hurkens, 2014. "Bayesian Nash equilibrium in “linear” Cournot models with private information about costs," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(2), pages 203-217, June.
    • Handle: RePEc:bla:ijethy:v:10:y:2014:i:2:p:203-217
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    Cited by:

    1. Francesco Sinopoli & Christopher Künstler & Claudia Meroni & Carlos Pimienta, 2023. "Poisson–Cournot games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 75(3), pages 803-840, April.
      • Francesco De Sinopoli & Christopher Kunstler & Claudia Meroni & Carlos Pimienta, 2020. "Poisson-Cournot Games," Discussion Papers 2020-07, School of Economics, The University of New South Wales.
    2. Jihad C. Elnaboulsi & Wassim Daher & Yiğit Sağlam, 2023. "Environmental taxation, information precision, and information sharing," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(2), pages 301-341, April.
    3. Anthony Creane & Kaz Miyagiwa, 2020. "Export versus FDI: Learning through propinquity," International Journal of Economic Theory, The International Society for Economic Theory, vol. 16(4), pages 361-379, December.
    4. Michel Mougeot & Florence Naegelen, 2007. "Was Chadwick right?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 30(2), pages 121-137, March.

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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