The Stability of the Cournot Oligopoly Solution: The Effects of Speeds of Adjustment and Increasing Marginal Costs

Fisher, Franklin M.

doi:10.2307/2295710

Cited by 145 publications

(103 citation statements)

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“…Consider a setting with the following characteristics. Assume an emerging market where firms enter by in- 5 For Orstein-Uhlenbeck mean-reverting equation, cannot re-enter the market in a later period 7 . From Equations (8) and (9), we know that the optimal output path for firm 1 is greater than that of firm 2.…”

Section: Behavioral Errors and Firm Failurementioning

confidence: 99%

A Dynamic Cournot Model with Brownian Motion

youn¹,

Tremblay²

2015

TEL

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In this paper we develop a stochastic version of a dynamic Cournot model. The model is dynamic because firms are slow to adjust output in response to changes in their economic environment. The model is stochastic because management may make errors in identifying the best course of action in a dynamic setting. We capture these behavioral errors with Brownian motion. The model demonstrates that the limiting output level of the game is a random variable, rather than a constant that is found in the non-stochastic case. In addition, the limiting variance in firm output is smaller with more firms. Finally, the model predicts that firm failure is more likely in smaller markets and for firms that are smaller and less efficient at managing errors.

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Section: Behavioral Errors and Firm Failurementioning

confidence: 99%

A Dynamic Cournot Model with Brownian Motion

youn¹,

Tremblay²

2015

TEL

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“…Since we considered the Theocharis result as a possible outcome in treatment A, we wanted to make sure -besides the usual bankruptcy problems -that subjects would not be frustrated by low or negative payoffs. 5 So, additionally subjects earned a Þxed payoff of Taler 150 each round. The average payoff was about DM 37.84 which at the time were roughly $21.…”

Section: Experimental Designmentioning

confidence: 99%

“…In particular, the system can become stable if adjustment to the best reply is only partial (McManus and Quandt, 1961), or if marginal cost are increasing (Fisher, 1961).…”

Section: Introductionmentioning

confidence: 99%

Stability of the Cournot process - experimental evidence

Huck

Normann²,

Oechssler

2002

International Journal of Game Theory

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractWe report results of experiments designed to test the predictions of the best reply process. In a Cournot oligopoly with four Þrms, the best reply process should theoretically explode if demand and cost functions are linear. We Þnd, however, no experimental evidence of such instability. Moreover, we Þnd no differences between a market which theoretically should not converge to Nash equilibrium and one which should converge because of inertia. We investigate the power of several learning dynamics to explain this unpredicted stability.JEL-classification numbers: C72, C92, L13.

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“…Since the agent has to find the best partner, the algorithm can be compared to a Cournot adjustment process [6] were players iteratively adjust their strategies to their partner responses. In this paper, an agent strategy remains constant but it adjusts its preferences towards more profitable or cooperative partners.…”

Section: Introductionmentioning

confidence: 99%

Selection of Cooperative Partners in n-Player Games

Mariano

Correia

Grilo

2011

Advances in Artificial Life. Darwin Meets Von Neumann

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Abstract. We address the problem of finding the appropriate agents to interact with in n-player games. In our model an agent only requires knowledge about the payoff and identification of its partners. This information is used to update a probability distribution over candidate partners. As such, our model is applicable in any situation, be it a cooperative dilemma or a game where a Nash Equilibrium is equal to a Pareto Optimal profile.

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The Stability of the Cournot Oligopoly Solution: The Effects of Speeds of Adjustment and Increasing Marginal Costs

Cited by 145 publications

References 0 publications

A Dynamic Cournot Model with Brownian Motion

A Dynamic Cournot Model with Brownian Motion

Stability of the Cournot process - experimental evidence

Selection of Cooperative Partners in n-Player Games

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