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.
References listed on IDEAS
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.:
- 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.
- Jeffrey Campbell, 2000.
"Market Size Matters,"
Econometric Society World Congress 2000 Contributed Papers
1225, Econometric Society.
- Ngo Van Long & Antoine Soubeyran, 1999.
"Existence and Uniqueness of Cournot Equilibrium: A Contraction Mapping Approach,"
CIRANO Working Papers
- 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.
- 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.
- 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.
- Georg Götz & Walter Elberfeld & Frank Stähler, 2002. "Vertical foreign direct investment, welfare, and employment," Vienna Economics Papers 0213, University of Vienna, Department of Economics.
- 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.
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.