Cournot oligopoly with randomly arriving producers

Pierre Bernhard and Marc Deschamps
Additional contact information
Pierre Bernhard: Université Côte d'Azur, INRIA

No 2016-14, Working Papers from CRESE

Abstract: Cournot model of oligopoly appears as a central model of strategic interaction between competing firms both from a theoretical and applied perspective (e.g antitrust). As such it is an essential tool in the economics toolbox and always a stimulus. Although there is a huge and deep literature on it and as far as we know, we think that there is a 'mouse hole' wich has not already been studied: Cournot oligopoly with randomly arriving producers. In a companion paper [Bernhard and Deschamps, 2016b] we have proposed a rather general model of a discrete dynamic decision process where producers arrive as a Bernoulli random process and we have given some examples relating to oligopoly theory (Cournot, Stackelberg, cartel). In this paper we study Cournot oligopoly with random entry in discrete (Bernoulli) and continuous (Poisson) time, whether time horizon is finite or infinite. Moreover we consider here constant and variable probability of entry or density of arrivals. In this framework, we are able to provide algorithmes answering four classical questions: 1/ what is the expected profit for a firm inside the Cournot oligopoly at the beginning of the game?, 2/ How do individual quantities evolve?, 3/ How do market quantities evolve?, and 4/ How does market price evolve?

Keywords: Cournot market structure; Bernoulli process of entry; Poisson density of arrivals; Dynamic Programming. (search for similar items in EconPapers)
JEL-codes: C61 C72 L13 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2016-11
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Cournot oligopoly with randomly arriving producers (2016)
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