Cournot Competition, Forward Markets and Efficiency

Blaise Allaz and Jean-Luc Vila
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Blaise Allaz: HEC Paris - Recherche - Hors Laboratoire - HEC Paris - Ecole des Hautes Etudes Commerciales

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Abstract: We build a model with two Cournot duopolists who produce at Time 0 wich is the date at which all demand is realized. N periods before time 0, the duopolists trade on a forward market for delivery at Time 0. Having made these contracts, they trade again at time ( − N + 1) for delivery at Time 0. etc. We show that, in equilibrium, each of them will sell forward which makes them worse off and makes consumers better off than if the forward market did not exist. When N, the number of forward trading periods prior to production, tends to infinity, the outcome tends to the competitive solution.

Keywords: Cournot; Competition (search for similar items in EconPapers)
Date: 1993-02
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Citations: View citations in EconPapers (308)

Published in Journal of Economic Theory, 1993, 59 (1), pp.1-16. ⟨10.1006/jeth.1993.1001⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00511806

DOI: 10.1006/jeth.1993.1001

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