lecture6寡头ICournot.ppt

Lecture 6:Cournot Competition * Oligopoly Models There are three dominant oligopoly models Cournot Bertrand Stackelberg They are distinguished by the decision variable that firms choose the timing of the underlying game We will start first with Cournot Model. * The Cournot Model Consider the case of duopoly (2 competing firms) and there are no entry.. Firms produce homogenous (identical) product with the market demand for the product: Marginal cost for each firm is constant at c per unit of output. Assume that Ac To get the demand curve for one of the firms we treat the output of the other firm as constant. So for firm 2, demand is It can be depicted graphically as follows. * The Cournot Model P = (A - Bq1) - Bq2 $ Quantity A - Bq1 如果 企业 1 的产量增加 则企业 2的需求曲线 左移 A - Bq’1 The profit-maximizing choice of output by firm 2 depends upon the output of firm 1 Demand Marginal revenue for firm 2 is MR2 = = (A - Bq1) - 2Bq2 MR2 MR2 = MC A - Bq1 - 2Bq2 = c 求解 q2 ? q*2 = (A - c)/2B - q1/2 c MC q*2 * The Cournot Model We have ? this is the best response function for firm 2 (reaction function for firm 2). It gives firm 2’s profit-maximizing choice of output for any choice of output by firm 1. In a similar fashion, we can also derive the reaction function for firm 1. Cournot-Nash equilibrium requires that both firms be on their reaction functions. * q2 q1 The reaction function for firm 1 is q*1 = (A-c)/2B - q2/2 (A-c)/B (A-c)/2B Firm 1’s reaction function The reaction function for firm 2 is q*2 = (A-c)/2B - q1/2 (A-c)/2B (A-c)/B If firm 2 produces nothing then firm 1 will produce the monopoly output (A-c)/2B If firm 2 produces (A-c)/B then firm 1 will choose to produce no output Firm 2’s reaction function The Cournot-Nash equilibrium is at the intersection of the reaction functions C qC1 qC2 The Cournot Model * q2 q1 (A-c)/B (A-c)/2B Firm 1’s reaction function (A-c)/2B (A-c)/B Firm 2’s reaction function C q*1