Conjectures between Two Cournot Firms with Symmetric Information and Their Risk-taking Behaviours

Suyeol Ryu () and Iltae Kim ()
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Suyeol Ryu: Department of Economics, Andong National University
Iltae Kim: Department of Economics, Chonnam National University

Malaysian Journal of Economic Studies, 2017, vol. 54, issue 2, 223-234

Abstract: This paper introduces the simple and standard Cournot duopoly model in a symmetric situation in which each firm has the same information on the cost function of its rival. This paper considers two types of firms’ risk-taking behaviours and two classes of symmetric information. First, we consider that both firms are risk neutral and have perfect information. In this case, we obtain a unique Cournot equilibrium. Second, when both firms are risk neutral and have partial information, that is, each firm’s set of information changes from perfect to partial information, the number of equilibrium changes from one to four compared to case 1. Third, when both firms are risk averse and have perfect information, that is, firms’ risk taking behaviours change from risk neutral to risk averse, the number of equilibrium changes from one to three compared to case 1. Therefore, both firms’ information structure and risk taking behaviours affect their optimal output strategies.

Keywords: Cournot equilibrium; risk aversion; risk neutrality; symmetric information (search for similar items in EconPapers)
JEL-codes: D81 F23 L13 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:mjr:journl:v:54:y:2017:i:2:p:223-234

DOI: 10.22452/MJES.vol54no2.3

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