Existence, Uniqueness, and Symmetry of Free-Entry Cournot Equilibrium: The Importance of Market Size and Technoligy Choice
This article adds technology choice to a free-entry Cournot model with linear demand and constant marginal costs. Firms can choose from a discrete set of technologies. This simple framework yields non-existence of equilibrium, existence of multiple equilibria and equilibria in which ex-ante indentical firms choose different technoligies as possible outcomes. I provide a full characterization of the parameter sets for which these outcomes arise. The (non)-existence problem disappears if vertical market size is large. Non-existence is largely a ´small number´phenemenon. Asymetric equilibria emerge either because of indivisibilities or due to similarity of different technologies in terms of the average costs realized.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Van Long, Ngo & Soubeyran, Antoine, 2000. "Existence and uniqueness of Cournot equilibrium: a contraction mapping approach," Economics Letters, Elsevier, vol. 67(3), pages 345-348, June.
- Lambson, Val Eugene, 1987. "Is the Concentration-Profit Correlation Partly an Artifact of Lumpy Technology?," American Economic Review, American Economic Association, vol. 77(4), pages 731-33, September.
- Jeffrey R. Campbell & Hugo A. Hopenhayn, 2005.
"Market Size Matters,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 53(1), pages 1-25, 03.
- Jeffrey Campbell, 2000. "Market Size Matters," Econometric Society World Congress 2000 Contributed Papers 1225, Econometric Society.
- Jeffrey R. Campbell & Hugo A. Hopenhayn, 2002. "Market Size Matters," NBER Working Papers 9113, National Bureau of Economic Research, Inc.
- Jeffrey R. Campbell & Hugo Hopenhayn, 2003. "Market size matters," Working Paper Series WP-03-12, Federal Reserve Bank of Chicago.
- Lu�s M B Cabral & Jos� Mata, 2003.
"On the Evolution of the Firm Size Distribution: Facts and Theory,"
American Economic Review,
American Economic Association, vol. 93(4), pages 1075-1090, September.
- Cabral, Luís M B & Mata, José, 2001. "On the Evolution of the Firm Size Distribution: Facts and Theory," CEPR Discussion Papers 3045, C.E.P.R. Discussion Papers.
- Dasgupta, Partha & Stiglitz, Joseph, 1980. "Industrial Structure and the Nature of Innovative Activity," Economic Journal, Royal Economic Society, vol. 90(358), pages 266-93, June.
- Davis, Peter, 2006. "Estimation of quantity games in the presence of indivisibilities and heterogeneous firms," Journal of Econometrics, Elsevier, vol. 134(1), pages 187-214, September.
- Georg Götz & Walter Elberfeld & Frank Stähler, 2002.
"Vertical foreign direct investment, welfare, and employment,"
Vienna Economics Papers
0213, University of Vienna, Department of Economics.
- Elberfeld Walter & Götz Georg & Stähler Frank, 2005. "Vertical Foreign Direct Investment, Welfare, and Employment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-30, February.
When requesting a correction, please mention this item's handle: RePEc:vie:viennp:0214. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paper Administrator)
If references are entirely missing, you can add them using this form.