Efficiency of dynamic quantity competition: A remark on Markovian equilibria

This paper extends Maskin and Tirole analysis of dynamic quantity competition in terms of Markov perfect equilibria to the case in which firms have different fixed costs. It is proved that allocative efficiency still prevails but not productive efficiency.

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Bibliographic Details
Published in:Economics letters 1996-02, Vol.50 (2), p.213-221
Main Authors: Lahmandi-Ayed, Rim, Ponssard, Jean-Pierre, Sevy, David
Format: Article
Language:English
Subjects:
Dynamic oligopoly
Economic efficiency
Efficiency
Equilibrium
Markov equilibria
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Description
Summary:This paper extends Maskin and Tirole analysis of dynamic quantity competition in terms of Markov perfect equilibria to the case in which firms have different fixed costs. It is proved that allocative efficiency still prevails but not productive efficiency.
ISSN:0165-1765
1873-7374
DOI:10.1016/0165-1765(95)00753-9