Computing Cournot Equilibrium through Maximization over Prices∗
نویسنده
چکیده
This paper presents an alternative characterization of internal Cournot equilibrium based on the first-order conditions corresponding to profit maximization over prices. This characterization is particularly useful when the market is described in terms of demand functions (rather than inverse-demand functions). A significant computational advantage is gained in homogeneous good cases as demand functions need not be inverted and simple first order conditions are obtained. In addition, this approach mimics price setting behavior and thus suggests a price competition interpretation of the Cournot game. ∗This paper originated during our joint work with Benan Orbay on a related paper, for which I am grateful to her. I would also like to thank Ozgur Kibris, Kieron Meagher and Murat Usman for their comments and suggestions on earlier versions. †Sabancı University, Orhanli, Tuzla 34956 Istanbul, Turkey; e-mail: [email protected].
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