Abstract

http://ssrn.com/abstract=1806055
 
 

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Oligopolistic Equilibrium and Financial Constraints


Carmen Bevia


Universitat Autònoma de Barcelona - Departament d’Economia i d’Història Econòmica

Luis C. Corchón


Universidad Carlos III de Madrid - Department of Economics

Yosuke Yasuda


National Graduate Institute for Policy Studies (GRIPS)

December 12, 2012


Abstract:     
In this paper we provide a model of dynamic oligopoly in which fi…rms take into account the fi…nancial constraints of all …firms. The study of the equilibria of our dynamic game leads to the concept of Bankruptcy-Free outputs (BF) in which no …firm can drive another fi…rm to bankruptcy without becoming bankrupt itself. For a duopoly with sufficiently patient fi…rms all equilibria yield BF outputs. When there are more than two fi…rms, outputs other than BF can be sustained as equilibria but the set of BF outputs is still useful in explaining the shape of the equilibrium set. Cournot one-shot equilibrium and joint pro…t maximization are more difficult to sustain as equilibria of our game than under the standard repeated games.

Number of Pages in PDF File: 30

Keywords: Financial Constraints, Bankruptcy, Firm Behavior, Dynamic Games

JEL Classification: D2, D4, L1, L2

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Date posted: April 11, 2011 ; Last revised: January 20, 2013

Suggested Citation

Bevia, Carmen and Corchón, Luis C. and Yasuda, Yosuke, Oligopolistic Equilibrium and Financial Constraints (December 12, 2012). Available at SSRN: http://ssrn.com/abstract=1806055 or http://dx.doi.org/10.2139/ssrn.1806055

Contact Information

Carmen Bevia
Universitat Autònoma de Barcelona - Departament d’Economia i d’Història Econòmica ( email )
Edifici B - Campus Bellaterra
Barcelona, 08193
Spain
935812190 (Phone)
935812012 (Fax)
Luis Carlos Corchón Diaz
Universidad Carlos III de Madrid - Department of Economics ( email )
Calle Madrid 126
Getafe, 28903
Spain
Yosuke Yasuda (Contact Author)
National Graduate Institute for Policy Studies (GRIPS) ( email )
7-22-1 Roppongi, Minato-ku
Tokyo, Tokyo 106-8677
Japan
HOME PAGE: http://https://sites.google.com/site/yosukeyasuda/Home
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