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On the dominance solvability of large cournot games

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  • Börgers, Tilman
  • Janssen, Maarten C.W.

Abstract

We consider Cournot's model of oligopolistic competition in a market for a homogeneous good. We seek conditions under which the oligopolists' game is dominance solvable and hence the Cournot equilibrium is the only outcome that survives iterated deletion of dominated strategies. We focus on "large" oligopolies, whereby we define an oligopoly to be "large" if both the demand and the supply side are replicated more than a certain finite number of times. We show that "large" Cournot oligopolies are dominance solvable if and only if the equilibrium of the approximated perfectly competitive market is globally stable under cobweb dynamics. Journal of Economic Literature Classification Numbers: 022.

Suggested Citation

  • Börgers, Tilman & Janssen, Maarten C.W., 1995. "On the dominance solvability of large cournot games," Games and Economic Behavior, Elsevier, vol. 8(2), pages 297-321.
    • Handle: RePEc:eee:gamebe:v:8:y:1995:i:2:p:297-321
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    4. Gaballo, Gaetano, 2013. "Eductive learning and the rationalizability of oligopoly games," Economics Letters, Elsevier, vol. 120(3), pages 401-404.
    5. Zimper, Alexander, 2004. "Dominance-Solvable Lattice Games," Sonderforschungsbereich 504 Publications 04-18, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    6. Weinstein, Jonathan & Yildiz, Muhamet, 2011. "Sensitivity of equilibrium behavior to higher-order beliefs in nice games," Games and Economic Behavior, Elsevier, vol. 72(1), pages 288-300, May.
    7. Indrajit Ray & Sonali Gupta, 2013. "Coarse correlated equilibria in linear duopoly games," International Journal of Game Theory, Springer;Game Theory Society, vol. 42(2), pages 541-562, May.
    8. Gaballo, Gaetano, 2014. "Sequential coordination, higher-order belief dynamics and the E-stability principle," Journal of Economic Dynamics and Control, Elsevier, vol. 44(C), pages 270-279.
    9. Indrajit Ray & Sonali Gupta, 2013. "Coarse correlated equilibria in linear duopoly games," International Journal of Game Theory, Springer;Game Theory Society, vol. 42(2), pages 541-562, May.

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