Cournot oligopoly: a discrete time sticky-prices paradox

Marc Deschamps and Pierre Bernhard ()
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Pierre Bernhard: MACBES - Modélisation et commande de systèmes biologiques et écologiques - CRISAM - Centre Inria d'Université Côte d'Azur - Inria - Institut National de Recherche en Informatique et en Automatique - IPMC - Institut de pharmacologie moléculaire et cellulaire - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur - ISA - Institut Sophia Agrobiotech - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UniCA - Université Côte d'Azur

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Abstract: This article studies the issue of sticky prices in the context of a dynamic Cournot oligopoly model in discrete time with n asymmetric firms, and with costs and demand linear. We recover the somewhat surprising fact of the related continuous time literature that the asymptotic price is lower than the price of the repeated game. But contrary to the continuous time case, in discrete time we find 1/ that the limit at vanishing viscosity coincides with the non-sticky case, and, more surprisingly 2/ that the equlibrium price trajectory oscillates around the asymptotic price.

Keywords: Sticky price; Cournot oligopoly; Dynamic game; Discrete time (search for similar items in EconPapers)
Date: 2024-01-12
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Working Paper: Cournot oligopoly: a discrete time sticky-prices paradox (2024)
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