IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v217y2014i1p281-29710.1007-s10479-014-1558-x.html
   My bibliography  Save this article

Structure of demand and consistent conjectural variations equilibrium (CCVE) in a mixed oligopoly model

Author

Listed:
  • Vyacheslav Kalashnikov
  • Vladimir Bulavsky
  • Vitaliy Kalashnikov
  • Nataliya Kalashnykova

Abstract

We study conjectured variations equilibrium (CVE) in a model of mixed oligopoly with not necessarily continuous demand functions. The agents’ conjectures concern the price variations depending upon their production output increase or decrease. We establish the existence and uniqueness results for the CVE (called exterior equilibrium) for any set of feasible conjectures. To introduce the notion of interior equilibrium, we develop a consistency criterion for the conjectures (referred to as influence coefficients) and prove the existence theorem for the interior equilibrium (understood as CVE with consistent conjectures, or CCVE). In addition, we also examine the behavior of the consistent conjectures as functions of a parameter representing the demand’s derivative with respect to the market price. The latter results allow one to predict the behavior of groups of consumers with different consumption abilities. The proposed techniques permit one to develop a qualitative description of the dependence of the market price on the active demand component, too. It should be noticed that due to the non-smoothness of the demand function, there is possibly a path dependency and indeterminacy of equilibria in certain cases. This is, on the one hand, a theoretically inconvenient result (multiple equilibria), but on the other hand, it may happen to be extremely useful for applications. Indeed, the latter multiplicity of equilibria might serve as a rationale for the regulatory intervention to induce a change of equilibrium whenever the total welfare could be improved (cf., for example, the Keynesian stimulus). Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Vyacheslav Kalashnikov & Vladimir Bulavsky & Vitaliy Kalashnikov & Nataliya Kalashnykova, 2014. "Structure of demand and consistent conjectural variations equilibrium (CCVE) in a mixed oligopoly model," Annals of Operations Research, Springer, vol. 217(1), pages 281-297, June.
    • Handle: RePEc:spr:annopr:v:217:y:2014:i:1:p:281-297:10.1007/s10479-014-1558-x
    DOI: 10.1007/s10479-014-1558-x
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10479-014-1558-x
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10479-014-1558-x?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. Nicola Giocoli, 2005. "The escape from conjectural variations: the consistency condition in duopoly theory from Bowley to Fellner," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 29(4), pages 601-618, July.
    2. Lindh, Thomas, 1992. "The inconsistency of consistent conjectures : Coming back to Cournot," Journal of Economic Behavior & Organization, Elsevier, vol. 18(1), pages 69-90, June.
    3. Mélanie Heugues, 2014. "International environmental cooperation: a new eye on the greenhouse gas emissions’ control," Annals of Operations Research, Springer, vol. 220(1), pages 239-262, September.
    4. Toshihiro Matsumura & Osamu Kanda, 2005. "Mixed Oligopoly at Free Entry Markets," Journal of Economics, Springer, vol. 84(1), pages 27-48, February.
    5. Kathrin Fischer, 2002. "Sequential Discrete p-Facility Models for Competitive Location Planning," Annals of Operations Research, Springer, vol. 111(1), pages 253-270, March.
    6. Pierre-Olivier Pineau & Pauli Murto, 2003. "An Oligopolistic Investment Model of the Finnish Electricity Market," Annals of Operations Research, Springer, vol. 121(1), pages 123-148, July.
    7. repec:bla:econom:v:57:y:1990:i:227:p:319-28 is not listed on IDEAS
    8. Toshihiro Matsumura, 2003. "Stackelberg Mixed Duopoly with a Foreign Competitor," Bulletin of Economic Research, Wiley Blackwell, vol. 55(3), pages 275-287, July.
    9. Noriaki Matsushima & Toshihiro Matsumura, 2003. "Mixed oligopoly and spatial agglomeration," Canadian Journal of Economics, Canadian Economics Association, vol. 36(1), pages 62-87, February.
    10. Juan Aparicio & Juan Ferrando & Ana Meca & Julia Sancho, 2008. "Strategic bidding in continuous electricity auctions: an application to the Spanish electricity market," Annals of Operations Research, Springer, vol. 158(1), pages 229-241, February.
    11. Anna Nagurney & Kanwalroop Dhanda, 2000. "Noncompliant oligopolistic firms and marketable pollution permits: Statics and dynamics," Annals of Operations Research, Springer, vol. 95(1), pages 285-312, January.
    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. Debin Fang & Qiyu Ren & Qian Yu, 2018. "How Elastic Demand Affects Bidding Strategy in Electricity Market: An Auction Approach," Energies, MDPI, vol. 12(1), pages 1-13, December.

    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. Kalashnikov, Vyacheslav V. & Bulavsky, Vladimir A. & Kalashnykova, Nataliya I. & Castillo, Felipe J., 2011. "Mixed oligopoly with consistent conjectures," European Journal of Operational Research, Elsevier, vol. 210(3), pages 729-735, May.
    2. Toshihiro Matsumura & Akira Ogawa, 2010. "On The Robustness Of Private Leadership In Mixed Duopoly," Australian Economic Papers, Wiley Blackwell, vol. 49(2), pages 149-160, June.
    3. Hiroaki Ino & Toshihiro Matsumura, 2010. "What role should public enterprises play in free-entry markets?," Journal of Economics, Springer, vol. 101(3), pages 213-230, November.
    4. Stefan Lutz & Mario Pezzino, 2010. "Mixed oligopoly, vertical product differentiation and fixed qualitydependent costs," Economics Discussion Paper Series 1015, Economics, The University of Manchester.
    5. Matsushima, Noriaki & Matsumura, Toshihiro, 2006. "Mixed oligopoly, foreign firms, and location choice," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 753-772, November.
    6. Yuanzhu Lu, 2006. "Endogenous Timing in a Mixed Oligopoly with Foreign Competitors: the Linear Demand Case," Journal of Economics, Springer, vol. 88(1), pages 49-68, June.
    7. Wang, Leonard F.S. & Chen, Tai-Liang, 2011. "Mixed oligopoly, optimal privatization, and foreign penetration," Economic Modelling, Elsevier, vol. 28(4), pages 1465-1470, July.
    8. Toshihiro Matsumura & Noriaki Matsushima & Ikuo Ishibashi, 2009. "Privatization and entries of foreign enterprises in a differentiated industry," Journal of Economics, Springer, vol. 98(3), pages 203-219, December.
    9. Kalashnikov, Vyacheslav & Kemfert, Claudia & Kalashnikov, Vitaly, 2009. "Conjectural variations equilibrium in a mixed duopoly," European Journal of Operational Research, Elsevier, vol. 192(3), pages 717-729, February.
    10. Juan Bárcena-Ruiz & María Garzón, 2010. "Endogenous timing in a mixed oligopoly with semipublic firms," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 9(2), pages 97-113, August.
    11. Kenji Fujiwara, 2007. "Partial Privatization in a Differentiated Mixed Oligopoly," Journal of Economics, Springer, vol. 92(1), pages 51-65, September.
    12. Toshihiro Matsumura & Daisuke Shimizu, 2010. "Privatization Waves," Manchester School, University of Manchester, vol. 78(6), pages 609-625, December.
    13. Yoshihiro Tomaru & Masayuki Saito, 2010. "Mixed Duopoly, Privatization And Subsidization In An Endogenous Timing Framework," Manchester School, University of Manchester, vol. 78(1), pages 41-59, January.
    14. Jen-Yao Lee & Leonard F. S. Wang, 2018. "Foreign competition and optimal privatization with excess burden of taxation," Journal of Economics, Springer, vol. 125(2), pages 189-204, October.
    15. Leonard F. S. Wang & Ya‐Chin Wang & Lihong Zhao, 2009. "Privatization And Efficiency Gain In An International Mixed Oligopoly With Asymmetric Costs," The Japanese Economic Review, Japanese Economic Association, vol. 60(4), pages 539-559, December.
    16. Susumu Sato & Toshihiro Matsumura, 2019. "Dynamic Privatization Policy," Manchester School, University of Manchester, vol. 87(1), pages 37-59, January.
    17. Toshihiro Matsumura & Yoshihiro Tomaru, 2013. "Mixed duopoly, privatization, and subsidization with excess burden of taxation," Canadian Journal of Economics, Canadian Economics Association, vol. 46(2), pages 526-554, May.
    18. Kangsik Choi & Yuanzhu Lu, 2009. "A Model Of Endogenous Payoff Motives And Endogenous Timing In A Mixed Duopoly," Australian Economic Papers, Wiley Blackwell, vol. 48(3), pages 203-223, September.
    19. Juan Carlos Bárcena-Ruiz & María Begoña Garzón, 2020. "Partial privatization in an international mixed oligopoly under product differentiation," Journal of Economics, Springer, vol. 131(1), pages 77-100, September.
    20. Kazuhiko Kato, 2013. "Optimal degree of privatization and the environmental problem," Journal of Economics, Springer, vol. 110(2), pages 165-180, October.

    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:spr:annopr:v:217:y:2014:i:1:p:281-297:10.1007/s10479-014-1558-x. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.