Dynamic Cournot oligopoly game based on general isoelastic demand
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This paper explores a nonlinear Cournot oligopoly with n firms displaying general isoelastic demand. The marginal profits-based gradient rule and the expectation rule Local Monopolistic Approximation were employed in two Cournot oligopoly games. Nash equilibrium stability analysis is carried out on each of the two games to throw light on the effects of demand elasticity and other parameters on the dynamics of the game. Our results show that the influence of demand elasticity on stability depends on firms’ expectation rules.
KeywordsCournot oligopoly General isoelastic demand Bounded rationality Local stability
JEL ClassificationC62 D43 L13
The authors wish to thank the Spanish Ministry of Economics and Competitiveness (ECO2016-74940-P) and the Government of Aragon and FEDER (consolidated group S40_17R) for their financial support. The authors would like to express their thanks to the anonymous referees for their comments on earlier versions of this work.
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Conflict of interest
The authors declare that they have no conflict of interest.
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