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Stability of Cournot equilibria under discrete best-reply dynamics with non-negative output constraints

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  • Chen, Hsiao-Chi
  • Chow, Yunshyong

Abstract

This paper explores the stability of Cournot equilibria under discrete best-reply dynamics with non-negative output constraints. When firms produce complement goods, Cournot equilibria are the unique and globally stable solutions of the dynamics under some stability conditions, and all firms will survive in the long run regardless of their efficiency levels. By contrast, if firms produce substitute goods, Cournot equilibria are neither the limit of the dynamics nor stable unless all firms are efficient enough.

Suggested Citation

  • Chen, Hsiao-Chi & Chow, Yunshyong, 2016. "Stability of Cournot equilibria under discrete best-reply dynamics with non-negative output constraints," Economics Letters, Elsevier, vol. 149(C), pages 172-175.
    • Handle: RePEc:eee:ecolet:v:149:y:2016:i:c:p:172-175
    DOI: 10.1016/j.econlet.2016.10.020
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    References listed on IDEAS

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    More about this item

    Keywords

    Best-reply; Complement; Cournot equilibrium; Stability; Substitute;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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