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On Cournot Competition Under Random Yield

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  • XIAOMING YAN

    (School of Computer, Dongguan University of Technology, 523808, Dongguan, Guangdong, P. R. China;
    Chongqing Key Laboratory of Logistics, Chongqing University, Chongqing 400044, P. R. China)

  • YONG WANG

    (School of Economics and Business Administration, Chongqing University, 400044, Chongqing, P. R. China)

Abstract

We look at a Cournot model in which each firm may be unreliable with random capacity, so the total quantity brought into market is uncertain. The Cournot model has a unique pure strategy Nash equilibrium (NE), in which the number of active firms is determined by each firm's production cost and reliability. Our results indicate the following effects of unreliability: the number of active firms in the NE is more than that each firm is completely reliable and the expected total quantity brought into market is less than that each firm is completely reliable. Whether a given firm joins in the game is independent of its reliability, but any given firm always hopes that the less-expensive firms' capacities are random and stochastically smaller.

Suggested Citation

  • Xiaoming Yan & Yong Wang, 2013. "On Cournot Competition Under Random Yield," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 30(04), pages 1-26.
    • Handle: RePEc:wsi:apjorx:v:30:y:2013:i:04:n:s0217595913500073
    DOI: 10.1142/S0217595913500073
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    References listed on IDEAS

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    1. Yossi Sheffi, 2005. "The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262693496, April.
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    Cited by:

    1. Peng, Yang & Yan, Xiaoming & Jiang, Yujie & Ji, Min & Cheng, T.C.E., 2021. "Competition and coordination for supply chain networks with random yields," International Journal of Production Economics, Elsevier, vol. 239(C).

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