Welfare losses under Cournot competition

Welfare losses under Cournot competition

In a market for a homogeneous good where firms are identical, compete in quantities and produce with constant returns, the percentage of welfare losses (PWL) is small with as few as five competitors for a class of demand functions which includes linear and isoelastic cases. We study markets with positive fixed costs and asymmetric firms. We provide exact formulae of PWL and robust constructions...

Cournot Competition under Uncertainty∗

We analyze Cournot competition under demand uncertainty. We show that under rather general assumptions, the game has no asymmetric equilibria but multiple symmetric equilibria. Multiplicity is caused by the requirement of nonnegative prices and remains an issue also for simple demand specifications, such as the linear case. We then show that uniqueness of equilibrium is guaranteed if uncertaint...

On welfare losses due to imperfect competition

Corporate managers and executive compensation in many industries place significant emphasis on measures of firm size, such as sales revenue or market share. Such objectives have an important – yet thus far unquantified – impact on market performance. With n symmetric firms, equilibrium welfare losses are of order 1/n4, and thus vanish extremely quickly. Welfare losses are less than 5% for many ...

R&D subsidies under asymmetric Cournot competition

Endogenous fluctuations under evolutionary pressure in Cournot competition

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