Computing Cournot Equilibrium through Maximization over Prices

Orbay, Hakan (2007) Computing Cournot Equilibrium through Maximization over Prices. (Submitted)

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This paper presents an alternative characterization of internal Cournot equilibrium based on the first-order conditions corresponding to profit maximization over prices. This characterization is particularly useful when the market is described in terms of demand functions (rather than inverse-demand functions). A significant computational advantage is gained in homogeneous good cases as demand functions need not be inverted and simple first order conditions are obtained. In addition, this approach mimics price setting behavior and thus suggests a price competition interpretation of the Cournot game.

Item Type:Article
Subjects:H Social Sciences > HB Economic Theory
ID Code:7032
Deposited By:Hakan Orbay
Deposited On:12 Nov 2007 09:16
Last Modified:04 Dec 2009 13:50

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