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On the stability of Cournot equilibrium when the number of competitors increases
Umeå University, Faculty of Social Sciences, Centre for Regional Science (CERUM).
2008 (English)In: Journal of Economic Behavior and Organization, ISSN 0167-2681, E-ISSN 1879-1751, Vol. 66, no 3–4, 445-456 p.Article in journal (Refereed) Published
Abstract [en]

This article reconsiders whether the Cournot equilibrium really becomes a perfect competition equilibrium when the number of competitors goes to infinity. It has been questioned whether the equilibrium remains stable with an increasing number of firms. Contraindications were given for linear and for isoelastic demand functions. However, marginal costs were then taken as constant, which means adding more potentially infinite-sized firms. As we want to compare cases with few large firms to cases with many small firms, the model is tuned so as to incorporate capacity limits, decreasing with an increasing number of firms. Then destabilization is avoided.

Place, publisher, year, edition, pages
2008. Vol. 66, no 3–4, 445-456 p.
Keyword [en]
Cournot oligopoly, Capacity limits, Stability
National Category
Economics
Identifiers
URN: urn:nbn:se:umu:diva-100240OAI: oai:DiVA.org:umu-100240DiVA: diva2:790942
Available from: 2015-02-26 Created: 2015-02-26 Last updated: 2017-12-04

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http://www.sciencedirect.com/science/article/pii/S0167268107000303
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Centre for Regional Science (CERUM)
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Journal of Economic Behavior and Organization
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CiteExportLink to record
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