Paper #646

Title:

Price increase and stability with new entries in Cournot markets

Authors:

Ramon Villanova, Jaume Paradís, Pelegrí Viader and Joan Miralles

Date:

October 2002

Abstract:

It is widely accepted in the literature about the classical Cournot oligopoly model that the loss of quasi�competitiveness is linked, in the long run as new firms enter the market, to instability of the equilibrium. In this paper, though, we present a model in which a stable unique symmetric equilibrium is reached for any number of oligopolists as industry price increases with each new entry. Consequently, the suspicion that non�quasi�competitiveness implies, in the long run, instability is proved false.

Keywords:

Cournot equilibrium, non-cooperative oligopoly, quasi-competitiveness, stability

JEL codes:

D43,C62

Area of Research:

Statistics, Econometrics and Quantitative Methods

Published in:

Keio Economic Studies, 48, 69-96, 2012

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