Continuous approach to oligopolistic market equilibrium

Sjur D. Flam, Adi Ben-Israel

Research output: Contribution to journalArticlepeer-review

18 Scopus citations

Abstract

We provide an algorithm for computing Cournot-Nash equilibria in a market that involves finitely many producers. The algorithm amounts to following a certain dynamical system all the way to its steady state, which happens to be a noncooperative equilibrium. The dynamics arise quite naturally as follows. Let each producer continuously adjust the planned production, if desired, as a response to the current aggregate supply. In doing so, the producer is completely guided by myopic profit considerations. We show, under broad hypothesis, that this adjustment process is globally, asymptotically convergent to a Nash equilibrium.

Original languageEnglish (US)
Pages (from-to)1045-1051
Number of pages7
JournalOperations Research
Volume38
Issue number6
DOIs
StatePublished - 1990

All Science Journal Classification (ASJC) codes

  • Computer Science Applications
  • Management Science and Operations Research

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