Market Size, Technology Choice, and the Existence of Free-Entry Cournot Equilibrium

Author: Götz, Georg

Source: Journal of Institutional and Theoretical Economics JITE, Volume 161, Number 3, September 2005 , pp. 503-521(19)

Publisher: Mohr Siebeck

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Abstract:

This article adds technology choice to a free-entry Cournot model with linear demand and constant marginal costs. Firms can choose from a discrete set of technologies. This simple framework yields the nonexistence of (pure-strategy) equilibrium and the existence of multiple equilibria and equilibria in which ex ante identical firms choose different technologies, as possible outcomes. The (non)existence problem disappears if the vertical market size is large. Nonexistence is largely a small-number phenomenon. Asymmetric equilibria emerge either because of indivisibilities or because of similarity of different technologies in the average costs realized.

Document Type: Research article

DOI: http://dx.doi.org/10.1628/093245605774259372

Publication date: 2005-09-01

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Founded as Zeitschrift f�r die gesamte Staatswissenschaft in 1844.

As one of the oldest journals in the field of political economy, the Journal of Institutional and Theoretical Economics (JITE) deals traditionally with the problems of economics, social policy, and their legal framework. JITE is listed in the Journal of Economic Literature, the Social Science Citation Index, the International Bibliography of the Social Sciences, and COREJ.
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