Price increase and stability with new entries in Cournot markets

Ramon Villanova (), Jaume Paradís (), Pelegrí Viader () and Joan Miralles ()
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Ramon Villanova: https://www.upf.edu/web/econ/faculty/-/asset_publisher/6aWmmXf28uXT/persona/id/3418633
Pelegrí Viader: https://www.upf.edu/web/econ/faculty/-/asset_publisher/6aWmmXf28uXT/persona/id/3418630

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: It is widely accepted in the literature about the classical Cournot oligopoly model that the loss of quasi–competitiveness is linked, in the long run as new firms enter the market, to instability of the equilibrium. In this paper, though, we present a model in which a stable unique symmetric equilibrium is reached for any number of oligopolists as industry price increases with each new entry. Consequently, the suspicion that non–quasi–competitiveness implies, in the long run, instability is proved false.

Keywords: Cournot equilibrium; non-cooperative oligopoly; quasi-competitiveness; stability (search for similar items in EconPapers)
JEL-codes: C62 D43 (search for similar items in EconPapers)
Date: 2002-10, Revised 2012-01
New Economics Papers: this item is included in nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:646

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