On the existence of Bayesian Cournot equilibrium

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 f...

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Bibliographic Details
Published in:Games and economic behavior 2010, Vol.68 (1), p.77-94
Main Authors: Einy, Ezra, Haimanko, Ori, Moreno, Diego, Shitovitz, Benyamin
Format: Article
Language:English
Subjects:
Bayesian
Bayesian analysis
Bayesian method
Cournot
Demand
Duopoly
Equilibrium
Existence
Imperfect information
Incomplete information
Market analysis
Oligopoly
Oligopoly Incomplete information Bayesian Cournot Equilibrium Existence Uniqueness
Pricing
Studies
Uniqueness
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Summary: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.
ISSN:0899-8256
1090-2473
DOI:10.1016/j.geb.2009.06.002