Economics at your fingertips  

Cournot-like Interaction with Cournot Outcomes

Gerasimos Soldatos ()

Studies in Microeconomics, 2018, vol. 6, issue 1-2, 100-104

Abstract: Abstract This article works out a Cournot duopoly where firms take price as given, but it is not the same price that is taken for given by each firm; it depends on individual expectations about opponent’s behaviour as are shaped by the business cycle. Yet, the result of this interaction is a Cournot equilibrium as if the calculations were based on the same price. It is not the price that would be assumed in the absence of expectations. Expectations make inverse-U-shaped reaction curves peak at higher output levels relative to peaks in their absence, implying a lower price vis-à -vis that which is taken for granted in the traditional analysis. And, output levels are higher because they reflect optimism for the course of the economy. In the static context of the analysis, a Cournot equilibrium comes about as if the business cycle is at each peak. Policy-wise, the message is that observed price variations in an oligopoly do not necessarily indicate Bertrand competition despite the possibility that dynamic interaction may lead to outcomes other than the Cournot one; but it will be about disequilibrium and unstable outcomes. JEL Classifications: D43, L13, E32

Keywords: Cournot duopoly; business cycle; inverse-U-shaped reaction curves; expectations-dependent price (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1177/2321022218783882

Access Statistics for this article

More articles in Studies in Microeconomics
Bibliographic data for series maintained by SAGE Publications ().

Page updated 2023-01-09
Handle: RePEc:sae:miceco:v:6:y:2018:i:1-2:p:100-104