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On the Existence of Bayesian Cournot Equilibrium

  • Ezra Einy

    ()

    (Department of Economics Ben-Gurion University, Israel)

  • Ori Haimanko

    ()

    (Department of Economics, Ben Gurion University, Israel)

  • Diego Moreno

    ()

    (Departamento de Econom?a, Universidad Carlos III de Madrid, Spain)

  • Benyamin Shitovitz

    ()

    (Department of Economics, University of Haifa, Israel)

We show that when firms have asymmetric information about the market demand and theirs costs, a (Bayesian) Cournot equilibrium in pure strategies may not exist, or be unique. In fact, we are able to construct surprisingly simple and robust examples of duopolies with these features. However, we also find sufficient conditions for existence, and for uniqueness, of Cournot equilibrium in a certain class of industries. More general results arise when negative prices are possible.

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Paper provided by Ben-Gurion University of the Negev, Department of Economics in its series Working Papers with number 0715.

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Length: 33 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:bgu:wpaper:0715
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  1. Amir, Rabah, 1996. "Cournot Oligopoly and the Theory of Supermodular Games," Games and Economic Behavior, Elsevier, vol. 15(2), pages 132-148, August.
  2. Einy, Ezra & Moreno, Diego & Shitovitz, Benyamin, 2003. "The value of public information in a Cournot duopoly," Games and Economic Behavior, Elsevier, vol. 44(2), pages 272-285, August.
  3. Vives, X., 1988. "Nash Equilibrium With Strategic Complementarities," UFAE and IAE Working Papers 107-88, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  4. Johan Lagerlöf, 2003. "Insisting on a Non-Negative Price: Oligopoly, Uncertainty, Welfare, and Multiple Equilibria," CIG Working Papers SP II 2003-04, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  5. Novshek, William, 1985. "On the Existence of Cournot Equilibrium," Review of Economic Studies, Wiley Blackwell, vol. 52(1), pages 85-98, January.
  6. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, August.
  7. Einy, Ezra & Moreno, Diego & Shitovitz, Benyamin, 2002. "Information Advantage in Cournot Oligopoly," Journal of Economic Theory, Elsevier, vol. 106(1), pages 151-160, September.
  8. Sakai, Yasuhiro, 1985. "The value of information in a simple duopoly model," Journal of Economic Theory, Elsevier, vol. 36(1), pages 36-54, June.
  9. 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 787-89, October.
  10. Ezra Einy & Ori Haimanko & Diego Moreno & Benyamin Shitovitz, 2007. "On the Existence of Bayesian Cournot Equilibrium," Working Papers 0702, Ben-Gurion University of the Negev, Department of Economics.
  11. Malueg, David A & Tsutsui, Shunichi O, 1998. "Oligopoly Information Exchange When Non-negative Price and Output Constraints May Bind," Australian Economic Papers, Wiley Blackwell, vol. 37(4), pages 363-71, December.
  12. Shapiro, Carl, 1986. "Exchange of Cost Information in Oligopoly," Review of Economic Studies, Wiley Blackwell, vol. 53(3), pages 433-46, July.
  13. Lagerlöf Johan N.M., 2006. "Equilibrium Uniqueness in a Cournot Model with Demand Uncertainty," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 6(1), pages 1-6, December.
  14. Gal-Or, Esther, 1985. "Information Sharing in Oligopoly," Econometrica, Econometric Society, vol. 53(2), pages 329-43, March.
  15. Gal-Or, Esther, 1986. "Information Transmission-Cournot and Bertrand Equilibria," Review of Economic Studies, Wiley Blackwell, vol. 53(1), pages 85-92, January.
  16. Raith, Michael, 1996. "A General Model of Information Sharing in Oligopoly," Journal of Economic Theory, Elsevier, vol. 71(1), pages 260-288, October.
  17. Vives, Xavier, 1984. "Duopoly information equilibrium: Cournot and bertrand," Journal of Economic Theory, Elsevier, vol. 34(1), pages 71-94, October.
  18. Kukushkin, Nikolai S., 1994. "A fixed-point theorem for decreasing mappings," Economics Letters, Elsevier, vol. 46(1), pages 23-26, September.
  19. Vives, Xavier, 1988. "Aggregation of Information in Large Cournot Markets," Econometrica, Econometric Society, vol. 56(4), pages 851-76, July.
  20. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-77, November.
  21. Shlomit Hon-Snir & Benyamin Shitovitz & Menahem Spiegel, 2010. "Bayesian Equilibrium in a Public Good Economy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(2), pages 387-398, 04.
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