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Characterization of Nash equilibria in Cournotian oligopolies with interdependent preferences

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  • Marco F. Boretto
  • Fausto Cavalli
  • Ahmad Naimzada

Abstract

We study the effects on the Nash equilibrium of the presence of a structure of social interdependent preferences in a Cournot oligopoly, described in terms of a game in which the network of interactions reflects on the utility functions of firms through a combination of weighted profits of their competitors as in [7]. Taking into account the channels of social and market interactions, we detail the consequence of preference interdependence on the best response of a firm, focusing on both direct and high degree of interdependence effects between two given firms. We characterize the Nash equilibrium in terms of social and market interactions among firms, through a Bonacich-like centrality measure and a scalar index describing the degree of competitiveness that characterizes an oligopoly with interdependent preferences. Finally, we study the equilibrium of some scenarios described by regular structures of interaction.

Suggested Citation

  • Marco F. Boretto & Fausto Cavalli & Ahmad Naimzada, 2021. "Characterization of Nash equilibria in Cournotian oligopolies with interdependent preferences," Working Papers 463, University of Milano-Bicocca, Department of Economics, revised Mar 2021.
    • Handle: RePEc:mib:wpaper:463
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    1. Marco F. Boretto & Fausto Cavalli & Ahmad Naimzada, 2021. "Comparative statics and centrality measures in oligopolies with interdependent preferences," Working Papers 464, University of Milano-Bicocca, Department of Economics, revised Mar 2021.

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    More about this item

    Keywords

    Cournot Game; Preference interdependence; Nash Equilibrium;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General

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