Symmetric equilibrium with random entry

DOI10.1016/0165-4896(88)90043-1MaRDI QIDQ1108916zbMATH OpenOpenAlexFDO

Authors Lanny Arvan

Publication date 1988

Published in Mathematical Social Sciences (Search for Journal in Brave)

Full work available at URL https://doi.org/10.1016/0165-4896(88)90043-1

zbMATH Keywords

Cournot-Nash equilibriumfree entryidentical firmslarge minimum efficient scalemixed strategiessymmetric equilibrium

Mathematics Subject Classification ID

Microeconomic theory (price theory and economic markets) (91B24)

Review text

This paper considers Cournot-Nash equilibrium with free entry among identical firms which possess large minimum efficient scale. We consider equilibrium in which all firms receive equal treatment by allowing firms to play mixed strategies. In particular, firms randomize over the decision to enter or not. It is shown that symmetric Cournot-Nash equilibrium in mixed strategies exists when there is a finite number of potential entrants. We then consider a sequence of such mixed strategy equilibria as the number of potential entrants gets large. It is shown that such a sequence always has a convergent subsequence whose limit is a symmetric equilibrium in mixed strategies when the number of potential entrants is infinite. An example is given which shows that increased competition, in the form of a larger pool of potential entrants, is socially harmful in that expected social surplus is decreasing in the number of potential entrants.

Recommendations

• On the Effects of Entry in Cournot Markets
• Pure strategy equilibria in finite symmetric concave games and an application to symmetric discrete Cournot games
• Free entry and stability in a Cournot model
• On the existence of equilibrium points in a class of asymmetric market entry games
• Entry, exit, and imperfect competition in the long run.

Cites work

• Cournot Equilibrium with Free Entry
• scientific article; zbMATH DE number 3249395 (Why is no real title available?)
• scientific article; zbMATH DE number 3186512 (Why is no real title available?)
• On the Foundations of the Theory of Monopolistic Competition

Cited in

(4)

• Entry, exit, and imperfect competition in the long run.
• Potential competition and coordination in a market-entry game
• On the existence of the ex post symmetric random entry model
• Mixed Bertrand equilibria under decreasing returns to scale: an embarrassment of riches

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