On a foundation for Cournot equilibrium
We show in the context of a bilateral oligopoly where all agents are allowed to behave strategically the unexpected result that when the number of buyers becomes large the outcomes in a strategic market game do not converge to those at the Cournot equilibrium. However, convergence to Cournot outcomes is restored if the game is sequential: sellers move simultaneously as do buyers, but the former always move before the latter. This suggests that the ability to commit to supply decisions is an essential feature of Cournot equilibrium.
|Date of creation:||Oct 2007|
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|Note:||Previously University of Manchester EDP 0638.|
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- Dickson, Alex & Hartley, Roger, 2008.
"The strategic Marshallian cross,"
Games and Economic Behavior,
Elsevier, vol. 64(2), pages 514-532, November.
- Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, June.
- 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.
- A. Dickson & R. Hartley, 2005. "The strategic Marshallian cross and bilateral oligopoly," The School of Economics Discussion Paper Series 0523, Economics, The University of Manchester.
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