Oligopoly model with interdependent preferences: existence and uniqueness of Nash equilibrium

Marco Boretto, Fausto Cavalli and Ahmad Naimzada

No 462, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: We propose a model to describe and study the effect of social interdependent preferences in a Cournot oligopoly based on a game in which the utility functions of firms depend on a combination of weighted profits of their competitors. If social interaction is neglected, the model reduces to the classic Cournot game, diverting from it as the role of social interaction becomes more and more relevant. Several synthetic measures are proposed to summarize the overall behavior of the agents and some configurations characterized by particular interactional structures are presented. Finally, the study of the well-posedness of the proposed framework is investigated, in terms of the existence and uniqueness of Nash equilibria. To this end, we generalize the conditions under which the existence and/or uniqueness of Nash equilibrium in classic game is guaranteed for particular Cournotian oligopoly models without interdependent preferences. In particular, we focus on two families of oligopolies, respectively consisting of "concave" oligopolies and oligopolies with isoelastic demand function.

Keywords: Cournot Game; Preference interdependence; Network; Nash Equilibrium; existence and uniqueness (search for similar items in EconPapers)
JEL-codes: C62 C70 D43 (search for similar items in EconPapers)
Pages: 23
Date: 2021-03, Revised 2021-03
New Economics Papers: this item is included in nep-cwa, nep-gth, nep-ind, nep-mic, nep-net and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://repec.dems.unimib.it/repec/pdf/mibwpaper462.pdf (application/pdf)

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: https://EconPapers.repec.org/RePEc:mib:wpaper:462

Access Statistics for this paper

More papers in Working Papers from University of Milano-Bicocca, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Matteo Pelagatti ().