Cournot Competition on a Network of Markets And Firms

23 Pages Posted: 5 Aug 2009

Date Written: August 3, 2009

Abstract

Suppose markets and firms are connected in a bi-partite network, where firms can only supply to the markets they are connected to. Firms compete a la Cournot and decide how much to supply to each market they have a link with. We assume that markets have linear demand functions and firms have convex quadratic cost functions. We show there exists a unique equilibrium in any given network of firms and markets. We provide a formula which expresses the quantities at an equilibrium as a function of a network centrality measure.

Keywords: Cournot markets, networks, nash equilibrium, centrality measures

JEL Classification: C62, C72, D85, L11

Suggested Citation

İlkiliç, Rahmi, Cournot Competition on a Network of Markets And Firms (August 3, 2009). FEEM Working Paper No. 32.2009, Available at SSRN: https://ssrn.com/abstract=1443216.

Rahmi İlkiliç (Contact Author)

Maastricht University ( email )

P.O.Box 616
Maastricht, 6200 MD
Netherlands

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