Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Wednesday, August 5, 2009

Cournot Competition on a Network of Markets and Firms

Posted by D. Daniel Sokol

Rahmi IlkiliƧ (Maastricht University) has written on Cournot Competition on a Network of Markets and Firms.

ABSTRACT: Suppose markets and firms are connected in a bi-partite network, where firms can only supply to the markets they are connected to. Firms compete a la Cournot and decide how much to supply to each market they have a link with. We assume that markets have linear demand functions and firms have convex quadratic cost functions. We show there exists a unique equilibrium in any given network of firms and markets. We provide a formula which expresses the quantities at an equilibrium as a function of a network centrality measure.

http://lawprofessors.typepad.com/antitrustprof_blog/2009/08/cournot-competition-on-a-network-of-markets-and-firms.html

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