Cournot-Nash Selection Process

Jati K. Sengupta
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Jati K. Sengupta: University of California

Chapter 4 in Competition and Growth, 2004, pp 100-119 from Palgrave Macmillan

Abstract: Abstract The selection process of firms in the evolution of industry follows a Cournot-Nash equilibrium, when firms operate in an oligopolistic market. We consider first a static symmetric framework where each of n firms operates under constant cost c and market demand is described by a stationary inverse demand curve, which is assumed to be linear for simplicity. This static model is then generalized to a noncooperative dynamic game where the firms are viewed as Cournot players, each maximizing the present discounted value of its profit stream over the horizon [0, ∞] at the constant positive rate of discount r. This frame-work naturally yields a differential game formulation, where the role of information available to each player plays a significant role. Asymmetry of the information structure can also be introduced at this stage, along with the stochastic aspects in the cost and demand structure.

Keywords: Nash Equilibrium; Replicator Dynamic; Evolutionary Stable Strategy; Free Entry; Dominant Firm (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-50531-5_4

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DOI: 10.1057/9780230505315_4

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