Bayesian-Cournot Competition

Ji-Tian Jeng ()
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Ji-Tian Jeng: Keele University, Department of Economics, Postal: Keele, Staffordshire ST5 5BG, United Kingdom.

No KERP 2005/01, Keele Economics Research Papers from Centre for Economic Research, Keele University

Abstract: We consider a model of Cournot competition where firms have incomplete information about their rivals’ costs. The equilibrium concept we use is that of Bayesian-Nash equilibrium. Our analysis is particularly novel since we recognise that each firm’s payoff is determined by its strategy choice and the unweighted sum of all firms’ strategy choices. By exploiting this "aggregative structure", we are able to characterise equilibria in a very simple way, and based on this characterisation we develop sufficient conditions under which there is a unique equilibrium. A comparative statics analysis is also carried out.

Keywords: Aggregative games; replacement function approach; Bayesian-Nash equilibrium. (search for similar items in EconPapers)
JEL-codes: C72 D81 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2005-02
New Economics Papers: this item is included in nep-com and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:kee:kerpuk:2005/01

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