Cournotian duopolistic firms may be Walrasian: a case in the Gabszewicz and Vial model

Francesca Busetto, Giulio Codognato, Giorgia Pavan and Simone Tonin ()
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Francesca Busetto: Università degli Studi di Udine
Giulio Codognato: Università degli Studi di Udine
Giorgia Pavan: Università degli Studi di Udine
Simone Tonin: Università degli Studi di Udine

Journal of Economics, 2023, vol. 140, issue 2, No 2, 140 pages

Abstract: Abstract In this paper, we present a refreshed version of the original model proposed by Gabszewicz and Vial (J Econ Theory 4:381–400, 1972) and we use their main example to review the main theoretical issues related to the notion of Cournot-Walras equilibrium. We compute, in the Gabszewicz and Vial main example, two different Cournot-Walras equilibria associated with different normalization rules. Moreover, in the same example, we compute a Utility-Cournot-Walras equilibrium as defined by Grodal (in: Allen (ed) Economics in a changing world, Macmillan, London, 1996) and we show that it coincides with the unique Walras equilibrium. Furthermore, using a proposition proved by Grodal (1996), we build a normalization rule with respect to which there is a Cournot-Walras equilibrium that coincides with the Utility-Cournot-Walras equilibrium and hence with the unique Walras equilibrium. To the best of our knowledge, this example provides the first case of Cournotian duopolistic firms being Walrasian in a production economy.

Keywords: Cournot-Walras equilibrium; Walras equilibrium; Price normalization; Profit maximization (search for similar items in EconPapers)
JEL-codes: C72 D51 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:140:y:2023:i:2:d:10.1007_s00712-023-00830-1

DOI: 10.1007/s00712-023-00830-1

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