IDEAS home Printed from https://ideas.repec.org/a/eee/apmaco/v312y2017icp169-176.html
   My bibliography  Save this article

The impact of cost uncertainty on Cournot oligopoly games

Author

Listed:
  • Askar, S.S.
  • Elettreby, M.F.

Abstract

In this paper, Cournot oligopoly model is examined with an uncertain quadratic cost function. A random quadratic cost function is introduced in this model. The model consists of three competed firms on which each firm in the model wants to maximize its expected profit and also wants to minimize its uncertainty by minimizing the cost. To handle this multi-objective optimization problem, the expectation and worst-case approaches are adopted used to study uncertainty. The existence and uniqueness of the equilibrium are obtained. The asymptotic behavior of the equilibrium point is also investigated. Complete stability and bifurcation analysis are provided. The obtained theoretical results are verified by numerical simulation.

Suggested Citation

  • Askar, S.S. & Elettreby, M.F., 2017. "The impact of cost uncertainty on Cournot oligopoly games," Applied Mathematics and Computation, Elsevier, vol. 312(C), pages 169-176.
    • Handle: RePEc:eee:apmaco:v:312:y:2017:i:c:p:169-176
    DOI: 10.1016/j.amc.2017.05.062
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0096300317303740
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.amc.2017.05.062?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Esther Gal-or, 1986. "Information Transmission—Cournot and Bertrand Equilibria," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(1), pages 85-92.
    2. Richard N. Clarke, 1983. "Collusion and the Incentives for Information Sharing," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 383-394, Autumn.
    3. Lode Li, 1985. "Cournot Oligopoly with Information Sharing," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 521-536, Winter.
    4. Gradstein, Mark & Nitzan, Shmuel & Slutsky, Steven, 1992. "The Effect of Uncertainty on Interactive Behaviour," Economic Journal, Royal Economic Society, vol. 102(412), pages 554-561, May.
    5. Sandmo, Agnar, 1971. "On the Theory of the Competitive Firm under Price Uncertainty," American Economic Review, American Economic Association, vol. 61(1), pages 65-73, March.
    6. Alison J. Kirby, 1988. "Trade Associations as Information Exchange Mechanisms," RAND Journal of Economics, The RAND Corporation, vol. 19(1), pages 138-146, Spring.
    7. Cyert, Richard M & DeGroot, Morris H, 1973. "An Analysis of Cooperation and Learning in a Duopoly Context," American Economic Review, American Economic Association, vol. 63(1), pages 24-37, March.
    8. G.‐I. Bischi & M. Gallegati & A. Naimzada, 1999. "Symmetry‐breaking bifurcations and representativefirm in dynamic duopoly games," Annals of Operations Research, Springer, vol. 89(0), pages 252-271, January.
    9. Li, Li, 2015. "Patch invasion in a spatial epidemic model," Applied Mathematics and Computation, Elsevier, vol. 258(C), pages 342-349.
    10. Cyert, Richard M. & DeGroot, Morris H., 1971. "Interfirm learning and the kinked demand curve," Journal of Economic Theory, Elsevier, vol. 3(3), pages 272-287, September.
    11. Feder, Gershon, 1977. "The impact of uncertainty in a class of objective functions," Journal of Economic Theory, Elsevier, vol. 16(2), pages 504-512, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. S. S. Askar & A. Al-khedhairi, 2019. "Analysis of a Four-Firm Competition Based on a Generalized Bounded Rationality and Different Mechanisms," Complexity, Hindawi, vol. 2019, pages 1-12, May.
    2. Zhu, Haoruo & Ni, Yaodong & Yang, Meng & Song, Qinyu, 2023. "Blessing or curse? Impact of incomplete information in a networked cournot competition," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).
    3. S. S. Askar & Mona F. EL-Wakeel & M. A. Alrodaini, 2018. "Exploration of Complex Dynamics for Cournot Oligopoly Game with Differentiated Products," Complexity, Hindawi, vol. 2018, pages 1-13, February.
    4. Sameh Askar, 2021. "Complex Investigations of a Piecewise-Smooth Remanufacturing Bertrand Duopoly Game," Mathematics, MDPI, vol. 9(20), pages 1-13, October.
    5. Askar, S.S. & Al-khedhairi, A., 2020. "On complex dynamic investigations of a piecewise smooth nonlinear duopoly game," Chaos, Solitons & Fractals, Elsevier, vol. 139(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Askar, S.S., 2014. "The impact of cost uncertainty on Cournot oligopoly game with concave demand function," Applied Mathematics and Computation, Elsevier, vol. 232(C), pages 144-149.
    2. Sjaak Hurkens, 2014. "Bayesian Nash equilibrium in “linear” Cournot models with private information about costs," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(2), pages 203-217, June.
    3. Duarte Brito & Pedro Pereira & João Vareda, 2016. "Can More Information About Rivals' Costs Decrease Welfare?," Manchester School, University of Manchester, vol. 84(2), pages 251-269, March.
    4. Jin, Jim Y., 1996. "A test for information sharing in Cournot oligopoly," Information Economics and Policy, Elsevier, vol. 8(1), pages 75-86, March.
    5. António Brandão & Joana Pinho, 2015. "Asymmetric Information And Exchange Of Information About Product Differentiation," Bulletin of Economic Research, Wiley Blackwell, vol. 67(2), pages 166-185, April.
    6. Medín, J. Andrés Faíña & Rodríguez, Jesús López & Rodríguez, José López, 2003. "Information Exchanges in Cournot Duopolies," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 57(1), January.
    7. Malueg, David A. & Tsutsui, Shunichi O., 1998. "Distributional assumptions in the theory of oligopoly information exchange1," International Journal of Industrial Organization, Elsevier, vol. 16(6), pages 785-797, November.
    8. Malueg, David A. & Tsutsui, Shunichi O., 1996. "Duopoly information exchange: The case of unknown slope," International Journal of Industrial Organization, Elsevier, vol. 14(1), pages 119-136.
    9. Jiang, Li & Hao, Zhongyuan, 2024. "Holding diverse market beliefs by firms: Information flow, profit performances, and channel structure," Omega, Elsevier, vol. 126(C).
    10. Lagerlof, Johan N.M., 2007. "Insisting on a non-negative price: Oligopoly, uncertainty, welfare, and multiple equilibria," International Journal of Industrial Organization, Elsevier, vol. 25(4), pages 861-875, August.
    11. Goltsman, Maria & Pavlov, Gregory, 2014. "Communication in Cournot oligopoly," Journal of Economic Theory, Elsevier, vol. 153(C), pages 152-176.
    12. Mariana Cunha & Paula Sarmento & Hélder Vasconcelos, 2014. "Uncertain Efficiency Gains and Merger Policy," FEP Working Papers 527, Universidade do Porto, Faculdade de Economia do Porto.
    13. Fabio Tramontana, 2013. "Information exchange in a Cournot duopoly with nonlinear demand function," DEM Working Papers Series 049, University of Pavia, Department of Economics and Management.
    14. Zhongyuan Hao & Li Jiang & Wenli Wang, 2018. "Impacts of sequential acquisition, market competition mode, and confidentiality on information flow," Naval Research Logistics (NRL), John Wiley & Sons, vol. 65(2), pages 135-159, March.
    15. William Novshek & Lynda Thoman, 2006. "Capacity Choice and Duopoly Incentives for Information Sharing," Southern Economic Journal, John Wiley & Sons, vol. 72(4), pages 808-825, April.
    16. Eliane Catilina, 2002. "Information Acquisition in Cournot Markets: An (enhanced) two- Stage Approach," Game Theory and Information 0205005, University Library of Munich, Germany.
    17. Lode Li, 2002. "Information Sharing in a Supply Chain with Horizontal Competition," Management Science, INFORMS, vol. 48(9), pages 1196-1212, September.
    18. Wu, Jianghua & Zhai, Xin & Huang, Zhimin, 2008. "Incentives for information sharing in duopoly with capacity constraints," Omega, Elsevier, vol. 36(6), pages 963-975, December.
    19. Dolores Alepuz, M. & Urbano, Amparo, 1999. "Duopoly experimentation: Cournot competition," Mathematical Social Sciences, Elsevier, vol. 37(2), pages 165-188, March.
    20. Sergio Currarini & Francesco Feri, "undated". "Information Sharing Networks in Oligopoly," Working Papers 2008-13, Faculty of Economics and Statistics, Universität Innsbruck.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:apmaco:v:312:y:2017:i:c:p:169-176. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/applied-mathematics-and-computation .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.