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Cournot oligopoly: a discrete time sticky-prices paradox

Author

Listed:
  • Marc Deschamps

    (CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE])

  • Pierre Bernhard

    (MACBES - Modélisation et commande de systèmes biologiques et écologiques - CRISAM - Centre Inria d'Université Côte d'Azur - Inria - Institut National de Recherche en Informatique et en Automatique - IPMC - Institut de pharmacologie moléculaire et cellulaire - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur - ISA - Institut Sophia Agrobiotech - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UniCA - Université Côte d'Azur)

Abstract

This article studies the issue of sticky prices in the context of a dynamic Cournot oligopoly model in discrete time with n asymmetric firms, and with costs and demand linear. We recover the somewhat surprising fact of the related continuous time literature that the asymptotic price is lower than the price of the repeated game. But contrary to the continuous time case, in discrete time we find 1/ that the limit at vanishing viscosity coincides with the non-sticky case, and, more surprisingly 2/ that the equlibrium price trajectory oscillates around the asymptotic price.

Suggested Citation

  • Marc Deschamps & Pierre Bernhard, 2024. "Cournot oligopoly: a discrete time sticky-prices paradox," Working Papers hal-04390731, HAL.
    • Handle: RePEc:hal:wpaper:hal-04390731
    Note: View the original document on HAL open archive server: https://univ-fcomte.hal.science/hal-04390731v1
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    References listed on IDEAS

    as
    1. Taylor, John B., 1999. "Staggered price and wage setting in macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 15, pages 1009-1050, Elsevier.
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    More about this item

    Keywords

    Sticky price; Cournot oligopoly; Dynamic game; Discrete time;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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