Poisson-Cournot Games

Francesco De Sinopoli (francesco.desinopoli@univr.it), Christopher Kunstler (c.kuenstler@fz-juelich.de), Claudia Meroni and Carlos Pimienta (c.pimienta@unsw.edu.au)
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Francesco De Sinopoli: Department of Economics, University of Verona
Christopher Kunstler: Institute of Energy and Climate Research, FZ Julich

No 2020-07, Discussion Papers from School of Economics, The University of New South Wales

Abstract: We construct a Cournot model in which firms have uncertainty about the total number of firms in the industry. We model such an uncertainty as a Poisson game and we characterize the set of equilibria after deriving some novel properties of the Poisson distribution. When the marginal cost is zero, the number of equilibria increases with the expected number of firms ( n) and for n ≥ 3 every equilibrium exhibits overproduction relative to the model with deterministic population size. Overproduction is robust to sufficiently small marginal costs, however, for a fixed marginal cost, the set of equilibria approaches the equilibrium quantity of the deterministic model as n goes to infinity.

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)
Pages: 43 pages
Date: 2020-05
New Economics Papers: this item is included in nep-com, nep-gth, nep-hpe, nep-ind, nep-mic and nep-ore
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Citations: View citations in EconPapers (1)

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Journal Article: Poisson–Cournot games (2023)
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