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Article

A Dynamic Model of Cournot Competition for an Oligopolistic Market

by 1,* and 2
1
International Business School, Beijing Foreign Studies University, Beijing 100089, China
2
Department of Economics, School of Economics and Management, Tsinghua University, Beijing 100084, China
*
Author to whom correspondence should be addressed.
Academic Editor: Christoph Frei
Mathematics 2021, 9(5), 489; https://doi.org/10.3390/math9050489
Received: 20 December 2020 / Revised: 23 February 2021 / Accepted: 23 February 2021 / Published: 27 February 2021
(This article belongs to the Special Issue Mathematical Game Theory 2021)
This paper studies firms’ dynamic interaction in a Cournot market. In each period of the game, the firm decides whether to make a stochastic positioning investment (establishing or maintaining its position in market competition). The market demand is also stochastic (high or low). By adopting symmetric Market perfect Nash equilibrium, firms choose strategies to maximize the discounted present value of cash flow. By considering the cases with one, two, and three active firms in the market, respectively, we present the stage game market outcome, show the transition probabilities, find the steady state of the system, and discuss the speed of convergence. Our work allows for two types of uncertainty in firms’ interactions, which contribute to the dynamic oligopoly literature. View Full-Text
Keywords: dynamic market; positional investment; uncertain demand dynamic market; positional investment; uncertain demand
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MDPI and ACS Style

Lian, Z.; Zheng, J. A Dynamic Model of Cournot Competition for an Oligopolistic Market. Mathematics 2021, 9, 489. https://doi.org/10.3390/math9050489

AMA Style

Lian Z, Zheng J. A Dynamic Model of Cournot Competition for an Oligopolistic Market. Mathematics. 2021; 9(5):489. https://doi.org/10.3390/math9050489

Chicago/Turabian Style

Lian, Zeng, and Jie Zheng. 2021. "A Dynamic Model of Cournot Competition for an Oligopolistic Market" Mathematics 9, no. 5: 489. https://doi.org/10.3390/math9050489

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