Poisson–Cournot games

Francesco Sinopoli (), Christopher Künstler (), Claudia Meroni and Carlos Pimienta ()
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Francesco Sinopoli: University of Verona
Christopher Künstler: FZ Jülich
Carlos Pimienta: The University of New South Wales

Economic Theory, 2023, vol. 75, issue 3, No 7, 803-840

Abstract: Abstract We construct a Cournot model with uncertainty in the number of firms in the industry. We model such an uncertainty as a Poisson game and characterize the set of equilibria after deriving novel properties of the Poisson distribution. When marginal costs are zero, the number of equilibria increases with the expected number of firms (n) and for $$n\ge 3$$ n ≥ 3 every equilibrium exhibits overproduction relative to the model with deterministic population size. For a fixed n, overproduction is robust to sufficiently small marginal costs. The set of equilibria can be Pareto ranked. If $$n\ge 3$$ n ≥ 3 , even the expected consumer surplus induced by the lowest quantity equilibrium is larger than the consumer surplus in the model without population uncertainty.

Keywords: Cournot competition; Population uncertainty; Poisson games; Poisson distribution (search for similar items in EconPapers)
JEL-codes: C72 D43 L13 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s00199-022-01425-5

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