Economics and Finance

    

Oligopoly Games for Use in the Classroom or Laboratory

Authors: Ate Nieuwenhuis

To illustrate that a Nash Equilibrium results from a flawed attempt to solve a game, this article studies two extensions of the classic oligopoly model of Cournot. The common cost function is quadratic, and the (still linear) inverse demand functions allow of differentiated goods. The model is a vector maximum problem, its Pareto Optimum is the solution. A Nash Equilibrium results from unwarranted conditioning on endogenous variables. The choice of parameters is discussed and six model variants are analysed numerically. Some comments are made on the use of the model in experimental economics.Keywords: Oligopoly game; Nash Equilibrium; Cournot Equilibrium; Bertrand Equilibrium; Vector maximisation; Pareto Optimum; Collusion. JEL: C61; C70; D21; D43; L11; L13.

Comments: 23 pages, 9 tables, 1 colour figure

Download: PDF

Submission history

[v1] 2021-04-20 07:37:21
[v2] 2022-04-20 13:25:42
[v3] 2023-03-15 13:11:48
[v4] 2025-02-06 22:22:22

Unique-IP document downloads: 773 times

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