On the Equilibrium Uniqueness in Cournot Competition with Demand Uncertainty
-
Stefanos Leonardos
and
Costis Melolidakis
Abstract
We revisit the linear Cournot model with uncertain demand that is studied in Lagerlöf (2006. “Equilibrium Uniqueness in a Cournot Model with Demand Uncertainty.” The B.E. Journal of Theoretical Economics 6, no. 1. (Topics), Article 19: 1–6.) and provide sufficient conditions for equilibrium uniqueness that complement the existing results. We show that if the distribution of the demand intercept has the decreasing mean residual demand (DMRD) or the increasing generalized failure rate (IGFR) property, then uniqueness of equilibrium is guaranteed. The DMRD condition implies log-concavity of the expected profits per unit of output without additional assumptions on the existence or the shape of the density of the demand intercept and, hence, answers in the affirmative the conjecture of Lagerlöf (2006. “Equilibrium Uniqueness in a Cournot Model with Demand Uncertainty.” The B.E. Journal of Theoretical Economics 6, no. 1. (Topics), Article 19: 1–6.) that such conditions may not be necessary.
Acknowledgements
The authors thank an anonymous reviewer for the quality of their reports and their invaluable feedback, comments and corrections which considerably improved the final version of the paper. Stefanos Leonardos gratefully acknowledges support by a scholarship of the Alexander S. Onassis Public Benefit Foundation.
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Articles in the same Issue
- Research Articles
- The Effects of Entry when Monopolistic Competition and Oligopoly Coexist
- Managerial Delegation of Competing Vertical Chains with Vertical Externality
- Fiat Money as a Public Signal, Medium of Exchange, and Punishment
- Education Spending, Fertility Shocks and Generational Consumption Risk
- Should the Talk be Cheap in Contribution Games?
- College Assignment Problems Under Constrained Choice, Private Preferences, and Risk Aversion
- Competition with Nonexclusive Contracts: Tackling the Hold-Up Problem
- Endogenous Authority and Enforcement in Public Goods Games
- Disequilibrium Trade in a Large Market for an Indivisible Good
- Pretrial Beliefs and Verdict Accuracy: Costly Juror Effort and Free Riding
- Product R&D Coopetition and Firm Performance
- A Model of Inequality Aversion and Private Provision of Public Goods
- Managerial Accountability Under Yardstick Competition
- On the Equilibrium Uniqueness in Cournot Competition with Demand Uncertainty
