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Price increase and stability with new entries in Cournot markets
Villanova, Ramon; Paradís, Jaume; Viader, Pelegrí; Miralles, Joan
Universitat Pompeu Fabra. Departament d'Economia i Empresa
It is widely accepted in the literature about the classicalCournot oligopoly model that the loss of quasi competitiveness is linked,in the long run as new firms enter the market, to instability of the equilibrium. In this paper, though, we present a model in which a stableunique symmetric equilibrium is reached for any number of oligopolistsas industry price increases with each new entry. Consequently, the suspicion that non quasi competitiveness implies, in the long run, instabilityis proved false.
Statistics, Econometrics and Quantitative Methods
cournot equilibrium
non-cooperative oligopoly
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