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Cournot competition and endogenous firm size

Author

Listed:
  • Francesco Saraceno

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Jason Barr

Abstract

The paper studies the dynamics of firm size in a repeated Cournot game with unknown demand function. We model the firm as a type of artificial neural network. Each period it must learn to map environmental signals to both a demand parameter and its rival's output choice. However, this learning game is in the background, as we focus on the endogenous adjustment of network size. We investigate the long-run evolution of firm/network size as a function of profits, rival's size, and the type of adjustment rules used.

Suggested Citation

  • Francesco Saraceno & Jason Barr, 2008. "Cournot competition and endogenous firm size," SciencePo Working papers Main hal-03417080, HAL.
    • Handle: RePEc:hal:spmain:hal-03417080
    DOI: 10.1007/s00191-008-0111-y
    Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-03417080
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    References listed on IDEAS

    as
    1. Barr, Jason & Saraceno, Francesco, 2002. "A computational theory of the firm," Journal of Economic Behavior & Organization, Elsevier, vol. 49(3), pages 345-361, November.
    2. Chang, Myong-Hun & Harrington, Joseph Jr., 2006. "Agent-Based Models of Organizations," Handbook of Computational Economics, in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 26, pages 1273-1337, Elsevier.
    3. Barr, Jason & Saraceno, Francesco, 2009. "Organization, learning and cooperation," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 39-53, May.
    4. Marc Nerlove, 1958. "Adaptive Expectations and Cobweb Phenomena," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 72(2), pages 227-240.
    5. Barr, Jason & Saraceno, Francesco, 2005. "Cournot competition, organization and learning," Journal of Economic Dynamics and Control, Elsevier, vol. 29(1-2), pages 277-295, January.
    6. Ray Barrell & Francesco Saraceno, 2005. "Cournot Competition, Organization and Learning," Post-Print hal-03597732, HAL.
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    More about this item

    Keywords

    Firm size; Adjustment dynamics; Artificial neural networks; Cournot games;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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