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Forward trading and adjustment costs in Cournot markets

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  • Henry Thille
  • Margaret E. Slade

Abstract

[eng] Many commodity markets satisfy the assumptions that underlie the Cournot model. These markets, however, have a feature that is not considered in that model - producers and consumers can enter into contracts for forward transactions. We consider the implications of forward trading for Cournot markets. In particular, we take the simple two-period game that is common in the literature and extend it to include various sorts of adjustment costs. The adjustment costs that we consider are of two sorts : They can involve time or periods during which players are committed to their decisions, or they can involve dollars or expenditure of resources when those decisions are changed. Whereas the former are procompetitive or output enhancing, we show that, in general, the latter are anticompetitive or output restricting. [fre] De nombreux marchés satisfont les hypothèses qui sont à la base du modèle de Cournot. Ces marchés ont cependant un trait qui n'est pas pris en compte dans ce modèle : les producteurs et les consommateurs peuvent contracter à terme. Nous considérons les implications des contrats à terme dans des marchés à la Cournot. En particulier, nous retenons un jeu à deux périodes assez commun dans la littérature et nous retendons afin d'intégrer différentes sortes de coûts d'ajustement. Les coûts d'ajustement que nous analysons sont de deux sortes. Ils peuvent impliquer des périodes de temps au cours desquelles les joueurs sont tenus par leurs décisions. Ou ils peuvent impliquer des dépenses de ressources en dollars quand ces décisions sont modifiées. Alors que les premiers sont concurrentiels, c'est-à-dire incitent à produire plus, les seconds sont anti-concurrentiels, c'est-à-dire incitent à produire moins.

Suggested Citation

  • Henry Thille & Margaret E. Slade, 2000. "Forward trading and adjustment costs in Cournot markets," Cahiers d'Économie Politique, Programme National Persée, vol. 37(1), pages 177-195.
  • Handle: RePEc:prs:caecpo:cep_0154-8344_2000_num_37_1_1294
    DOI: 10.3406/cep.2000.1294
    Note: DOI:10.3406/cep.2000.1294
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    References listed on IDEAS

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    Cited by:

    1. MITRAILLE Sébastien & MOREAUX Michel, 2007. "Inventories and Endogenous Stackelberg Hierarchy in Two-period Cournot Oligopoly," LERNA Working Papers 07.02.223, LERNA, University of Toulouse.
    2. Sébastien Mitraille & Michel Moreaux, 2013. "Inventories and Endogenous Stackelberg Leadership in Two‐Period Cournot Oligopoly," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(4), pages 852-874, December.
    3. Dana G. Popescu & Sridhar Seshadri, 2013. "Demand Uncertainty and Excess Supply in Commodity Contracting," Management Science, INFORMS, vol. 59(9), pages 2135-2152, September.
    4. Thille, Henry, 2003. "Forward trading and storage in a Cournot duopoly," Journal of Economic Dynamics and Control, Elsevier, vol. 27(4), pages 651-665, February.

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