A continuous approach to oligopolistic market equilibrium

A continuous approach to oligopolistic market equilibrium

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Article ID: iaor1992254
Country: United States
Volume: 38
Issue: 6
Start Page Number: 1045
End Page Number: 1051
Publication Date: Nov 1990
Journal: Operations Research
Authors: ,
Keywords: programming: nonlinear
Abstract:

The authors provide an algorithm for computing Cournot-Nash equilibria in a market that involves finitely many producers. The algorithm amounts to following a certain dynamical system all the way to its steady state, which happens to be a noncooperative equilibrium. The dynamics arise quite naturally as follows. Let each producer continuously adjust the planned production, if desired, as a response to the current aggregate supply. In doing so the producer is completely guided by myoptic profit considerations. The authors show, under broad hypothesis, that this adjustment process is globally, asymptotically convergent to a Nash equilibrium.

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