Cournot Equilibrium at the Limit

Vijay Adithya C () and Poornapushkala Narayanan
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Vijay Adithya C: (Corresponding author), Madras School of Economics, Gandhi Mandapam Road, Behind Government Data Centre, Kotturpuram, Chennai, 600025, India.
Poornapushkala Narayanan: Madras School of Economics, Chennai, Tamil Nadu, India, 600025

Working Papers from Madras School of Economics,Chennai,India

Abstract: This paper studies a Cournot market with infinitely many firms facing constant but heterogeneous marginal costs, without assuming perfect competition. We determine a necessary and sufficient condition for the existence of equilibrium - the marginal costs converge to a limit r with summable deviations. We deduce from this condition that perfect competition is not automatic in such markets, but competitive behavior emerges asymptotically under certain conditions on the costs. We also consider a family of finite markets growing to the infinite limit market. We show that the equilibria of finite markets converge to that of the limit market if and only if the average marginal costs of the finite markets converge to r.

Keywords: Cournot-Nash Equilibrium; Limit Market; Equilibrium Convergence (search for similar items in EconPapers)
Pages: 16 pages
Date: 2025-09
New Economics Papers: this item is included in nep-com and nep-mic
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