On the existence of Bayesian Cournot equilibrium

Ezra Einy, Ori Haimanko, Diego Moreno, Benyamin Shitovitz

Research output: Contribution to journalArticlepeer-review

Abstract

We show that when firms have incomplete information about the market demand and their costs, a (Bayesian) Cournot equilibrium in pure strategies may not exist, or be unique. In fact, we are able to construct surprisingly simple and robust examples of duopolies with these features. However, we also find some sufficient conditions for existence, and for uniqueness, of Cournot equilibrium in a certain class of industries. More general results arise when negative prices are possible.

Original languageEnglish
Pages (from-to)77-94
Number of pages18
JournalGames and Economic Behavior
Volume68
Issue number1
DOIs
StatePublished - Jan 2010

Bibliographical note

Funding Information:
✩ Ori Haimanko is grateful to the Japanese Society for the Promotion of Science (JSPS) for the support of the JSPS Invitation Fellowship program in Hitotsubashi University. He also thanks the Institute of Economic Research, Kyoto University, for accommodating his visits during the preparation of parts of this work. Diego Moreno gratefully acknowledges financial support of the Spanish Ministry of Education, grant SEJ2007-67436. * Corresponding author at: Department of Economics, Ben Gurion University of the Negev, Beer Sheva 84105, Israel. E-mail addresses: einy@econ.hit-u.ac.jp, einy@bgu.ac.il (E. Einy), orih@bgu.ac.il (O. Haimanko), dmoreno@eco.uc3m.es (D. Moreno), binya@econ.haifa.ac.il (B. Shitovitz).

Keywords

  • Bayesian
  • Cournot
  • Equilibrium
  • Existence
  • Incomplete information
  • Oligopoly
  • Uniqueness

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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