Overview and Directions for Future Research

In Chap. 1 we introduced the classical Cournot model and after setting up the general framework we focused on a number of specific examples involving combinations of linear and hyperbolic price functions and linear and quadratic cost functions, also taking careful account of capacity constraints. These examples illustrated the variety of reaction functions that can occur and the various types of equilibria (possibly multiple) both in the interior of the domain of interest and on its boundaries. We then went on to introduce the various types of adjustment processes that underpin the dynamic processes, the study of the local and global dynamics of which has occupied much of the space in this book. In particular we considered discrete time and continuous time versions of partial adjustment towards the best response with naive expectations and adaptive expectations as well as the gradient adjustment process. We then introduced some of the basic tools for the analysis of global dynamics via some examples involving duopoly or symmetric and semi-symmetric oligopolies. We introduced the important concept of basins of attraction of different equilibria and the important tool of the critical curve and the concept of border collision bifurcations method. Already with the simple examples considered we see the types of complexity that can arise in oligopoly models under the type of dynamic adjustment processes we consider here.