The notion of Nash equilibrium in static oligopoly games is based on the assumption that each firm knows its entire demand curve (and, therefore, its entire profit function). It is much more likely, however, that firms only have some idea of the outcome of small price variations within some relatively small interval of prices. This is because firms can only learn their demand functions through price experiments and if they are risk-averse and/or have a low discount factor, they will (...) be unwilling to engage in extensive price experiments involving large variations in price. We can therefore expect firms to experiment through small price variations and stop when they reach a price such that no small deviation.. (shrink)

This paper explores the role of inequity aversion as an explanation for observed behavior in experimental Cournot oligopolies. We show that inequity aversion can change the nature of the strategic interaction: quantities are strategic substitutes for sufficiently asymmetric output levels but strategic complements otherwise. We find that inequity aversion can explain why: some experiments result in higher than Cournot–Nash production levels while others result in lower, collusion often occurs with only two players whereas with three or more players market outcomes (...) are very close to Cournot–Nash, and players often achieve equal profits in asymmetric Cournot oligopoly. (shrink)

In cooperative Cournot oligopoly games, it is known that the β-core is equal to the α-core, and both are non-empty if every individual profit function is continuous and concave (Zhao, Games Econ Behav 27:153–168, 1999b). Following Chander and Tulkens (Int J Game Theory 26:379–401, 1997), we assume that firms react to a deviating coalition by choosing individual best reply strategies. We deal with the problem of the non-emptiness of the induced core, the γ-core, by two different approaches. The first (...) establishes that the associated Cournot oligopoly Transferable Utility (TU)-games are balanced if the inverse demand function is differentiable and every individual profit function is continuous and concave on the set of strategy profiles, which is a step forward beyond Zhao’s core existence result for this class of games. The second approach, restricted to the class of Cournot oligopoly TU-games with linear cost functions, provides a single-valued allocation rule in the γ-core called Nash Pro rata (NP)-value. This result generalizes Funaki and Yamato’s (Int J Game Theory 28:157–171, 1999) core existence result from no capacity constraint to asymmetric capacity constraints. Moreover, we provide an axiomatic characterization of this solution by means of four properties: efficiency, null firm, monotonicity, and non-cooperative fairness. (shrink)

One is the very founding document of oligopoly theory, Cournot’s seminal work of 1838. This is both because the specific model that he presented has been much studied for its ability to generate complex dynamics and also because of its more general foreshadowing of game theory. It has often been noted that the Cournot equilibrium is but a special case of the Nash (1951) equilibrium, the more general formulation used by modern industrial organization economists in studying oligopoly theory. (...) Indeed, it is sometimes even called the Cournot-Nash equilibrium. Although many of the models of complex oligopoly dynamics use the specific Cournot model, many use more general game theoretic formulations. We note simply as an aside here that Cournot’s work was the first to apply calculus to solving an economic optimization problem and also was the first to introduce supply and demand curves, albeit in the "Walrasian" form with price on the horizontal axis. (shrink)

Pricing algorithms are computerized procedures a seller may use to adapt instantaneously its price to market conditions, including to prices quoted by its rivals. These algorithms are related to the extensive use of web-collectors which contribute in many industries to identifying the best price. In such settings, price competition operates between algorithms, no longer between executives of brick and mortar companies. In this context, the question is to know how implicit forms of collusion may arise between the sellers. This paper (...) is aimed at discussing this conceptual issue in a price-setting homogeneous product oligopoly with decreasing returns to scale where algorithms implement matching policies. Using fixed point argument, we find a family of equilibrium prices encompassing Cournot and Pareto efficient solutions, if matching is allowed upward and downward. Dynamical stability is studied in the linear demand constant return case. When matching operates only for price undercutting, this family is extended up to a bottom value of the market price, close to the Walrasian price. Pricing algorithms may solve the Bertrand–Edgeworth paradox. (shrink)

This book provides both an explanation of the inflation which has bedeviled economic policy in the West since the end of World War II and a micro-economic theory to purge Keynesian models of the Walrasian strain derived from Marshall's Principles. By focusing on what is taken to be the representative business firm of the twentieth century - the large corporation or megacorp - the microeconomic model presented in the book reverses the usual assumptions of economic analysis. Instead of assuming the (...) existence of firms with no control over prices, the book examines how the megacorp uses its pricing power to finance its own internal rate of growth. The result is a determinant model of how prices are set under the sort of oligopolistic conditions which prevail in most modern industries throughout the world. (shrink)

This paper takes a novel approach to studying the existence and stability of Nash equilibria in N-firm Cournot–Bertrand oligopolies. First, we show that such games can be monotonically embedded into a game of strategic heterogeneity, so that each firm best responds to the choices of all other firms in a monotonic way. We then show that this monotonicity can be exploited to derive conditions which guarantee the existence of a unique, dominance solvable Nash equilibrium which is stable under all adaptive (...) dynamics. These conditions constitute a strict improvement over existing results in the literature. Finally, we examine the effect on these conditions resulting from additional firms entering the market. (shrink)

In this article, we revisit the classic comparison between Bertrand and Cournot competition in the presence of a cartel of firms that faces outsiders acting individually. This competition setting enables to deal with both non-cooperative and cooperative oligopoly games. We concentrate on industries consisting of symmetrically differentiated products where firms operate at a constant and identical marginal cost. First, while the standard Bertrand–Cournot rankings still hold for Nash equilibrium prices, we show that the results may be altered for Nash (...) equilibrium quantities and profits. Second, we define cooperative Bertrand and Cournot oligopoly games with transferable utility on the basis of their non-cooperative foundation. We establish that the core of a cooperative Cournot oligopoly game is strictly included in the core of a cooperative Bertrand oligopoly game when the number of firms is lower or equal to 25. Moreover, we focus on the aggregate-monotonic core, a subset of the core, that has the advantage to select point solutions satisfying both core selection and aggregate monotonicity properties. We succeed in comparing the aggregate-monotonic cores between Bertrand and Cournot competition regardless of the number of firms. Finally, we study a class of three-firm oligopolies with asymmetric costs in which the core inclusion property mentioned above still holds. We also provide numerical examples to illustrate the difficulty to generalize this result to an arbitrary number of firms because of negative equilibrium quantities. (shrink)

This paper presents a new theoretical justification for the Cournot–Bertrand model to arise in equilibrium when firms have, at the outset, the same cost structure and sell symmetrically differentiated products. The Cournot–Bertrand model assumes some firms compete on price, adjusting their production to meet demand, while others set quantities and let their price adjust until market equilibrium is reached. We show that this may occur endogenously due to the possibility of entry, which may be deterred when some of the incumbents (...) decide to set prices, while others free ride on this behavior and choose quantities. (shrink)

Video games are a $20-billion-a-year industry, but it is still treated as a niche market. The video game corporations hold considerable power over the articles that journalists write. Through in-de...

This paper proposes a Cournot game organized by three competing firms adopting bounded rationality. According to the marginal profit in the past time step, each firm tries to update its production using local knowledge. In this game, a firm’s preference is represented by a utility function that is derived from a constant elasticity of substitution production function. The game is modeled by a 3-dimensional discrete dynamical system. The equilibria of the system are numerically studied to detect their complex characteristics due (...) to difficulty to get an explicit form for those equilibria. For the proposed utility function, some cases with different value parameters are considered. Numerical simulations are used to provide an experimental evidence for the complex behavior of the evolution of the system. The obtained results show that the system loses its stability due to different types of bifurcations. (shrink)

In the last several months, several major disciplines have started their initial reckoning with what ChatGPT and other Large Language Models (LLMs) mean for them – law, medicine, business among other professions. With a heavy dose of humility, given how fast the technology is moving and how uncertain its social implications are, this article attempts to give some early tentative thoughts on what ChatGPT might mean for bioethics. I will first argue that many bioethics issues raised by ChatGPT are similar (...) to those raised by current medical AI – built into devices, decision support tools, data analytics, etc. These include issues of data ownership, consent for data use, data representativeness and bias, and privacy. I describe how these familiar issues appear somewhat differently in the ChatGPT context, but much of the existing bioethical thinking on these issues provides a strong starting point. There are, however, a few “new-ish” issues I highlight – by new-ish I mean issues that while perhaps not truly new seem much more important for it than other forms of medical AI. These include issues about informed consent and the right to know we are dealing with an AI, the problem of medical deepfakes, the risk of oligopoly and inequitable access related to foundational models, environmental effects, and on the positive side opportunities for the democratization of knowledge and empowering patients. I also discuss how races towards dominance (between large companies and between the U.S. and geopolitical rivals like China) risk sidelining ethics. (shrink)

This article provides a method for estimating the bounds of transaction costs in horizontal mergers. Consider, for example, a completed monopoly merger in linear Cournot oligopolies with 10 symmetric firms. The method shows that its transaction costs are at most 25% (78%) of total premerger profits if there is zero (100%) excess capacity. Such estimations can be extended in a straightforward manner to other mergers and other oligopoly models. The estimation is based both on the profitability precondition, and on (...) the non-empty core precondition, which postulates that the split of a merger’s profits be in its core. The article shows that the core in linear Cournot oligopolies has a non-empty interior, and indicates that the non-empty core precondition also sheds new lights on understanding important issues such as the stylized fact that mergers are likely to occur in markets plagued by excess capacities; why profitable mergers might not be formed; and why completed mergers might break up in the future. (shrink)

Professor Vernon L. Smith is a major creator of the new discipline of experimental economics. This collection of his papers from 1962 to 1990 surveys key developments in the field from early attempts to study economic behaviour in now classic double oral auction markets through recent studies of industrial organization and decision making. Topics covered include monopoly and oligopoly, supply and demand theory under posted pricing, uniform pricing, double continuous auction, and sealed bid-offer auctions; hypothetical valuation and market pricing; (...) asset price bubbles; predatory pricing; market contestability and natural monopoly; and the methodology of experimental economics. Taken together, the papers form a history of the study of economics under controlled conditions. (shrink)

The contribution describes the legal phenomenon as a playing field characterized by a progressive regression of the law, understood as a sovereign will from top to bottom, both in the vision of formalist legal positivisms in continental Europe and in realist terms, in the United States. Soft law represents the main strategy to subordinate the law to the interests of the economy, elasticizing environmental law, making it favorable to the market, reducing ecology to the simplistic metric of CO2 emissions. The (...) consequence is a retreat of the statist vertical normativity of law which is not replaced by a de facto power granted to those who control the technology, built by design to close spaces for pluralism and democratic action, in the interest of surveillance and concentrated power in private and government oligopolies. The author concludes by advocating the urgency for genuinely innovative categories, particularly in the legal education, such as the commons, capable of including sustainability into a “new ecological jurisprudence committed to inclusion and solidarity rather than exclusion and struggle”. (shrink)

This paper deals with the equilibria of games when the agents have multiple objectives and, therefore, their utilities cannot be represented by a single value, but by a vector containing the various dimensions of the utility. Our approach allows the incorporation of partial information about the preferences of the agents into the model, and permits the identification of the set of equilibria in accordance with this information. We also propose an additional conservative criterion which can be applied in this framework (...) in order to predict the results of interaction. The potential application of the theoretical results is shown with an analysis of a mixed oligopoly in which the agents value additional objectives other than their own benefit. These objectives are related to social welfare and to the profit of the industry. The flexibility of our approach provides a general theoretical framework for the analysis of a wide range of strategic economic models. (shrink)

We consider a normal-form game in which there is a single exogenously given coalition of cooperating players that can write a binding agreement on pre-selected actions. The actions representing other dimensions of the strategy space remain under the sovereign, individual control of the players. We consider a standard extension of the Nash equilibrium concept denoted as a partial cooperative equilibrium as well as an equilibrium concept in which the coalition of cooperators has a leadership position. Existence results are stated and (...) we identify conditions under which the various equilibrium concepts are equivalent. We apply this framework to existing models of multi-market oligopolies and international pollution abatement. In a multi-market oligopoly, typically, a merger paradox emerges in the partial cooperative equilibrium. The paradox vanishes if the cartel attains a leadership position. For international pollution abatement treaties, cooperation by a sufficiently large group of countries results in a Pareto improvement over the standard tragedy of the commons outcome described by the Nash equilibrium. (shrink)

A comprehensive, self-contained survey of the theory and applications of differential games, one of the most commonly used tools for modelling and analysing economics and management problems which are characterised by both multiperiod and strategic decision making. Although no prior knowledge of game theory is required, a basic knowledge of linear algebra, ordinary differential equations, mathematical programming and probability theory is necessary. Part One presents the theory of differential games, starting with the basic concepts of game theory and going on (...) to cover control theoretic models, Markovian equilibria with simultaneous play, differential games with hierarchical play, trigger strategy equilibria, differential games with special structures, and stochastic differential games. Part Two offers applications to capital accumulation games, industrial organization and oligopoly games, marketing, resources and environmental economics. (shrink)

This volume illustrates both theoretically and empirically the differences between religious diversity and religious pluralism. It highlights how the factual situation of cultural and religious diversity may lead to individual, social and political choices of organized and recognized pluralism. In the process, both individual and collective identities are redefined, incessantly moving along the continuum that ranges from exclusion to inclusion. The book starts by first detailing general issues related to religious pluralism. It makes the case for keeping the empirical, the (...) normative, the regulatory and the interactive dimensions of religious pluralism analytically distinct while recognizing that, in practice, they often overlap. It also underlines the importance of seeking connections between religious pluralism and other pluralisms. Next, the book explores how religious diversity can operate to contribute to legal pluralism and examines the different types of church-state relations: eradication, monopoly, oligopoly and pluralism. The second half of the book features case studies that provide a more specific look at the general issues, from ways to map and assess the religious diversity of a whole country to a comparison between Belgian-French views of religious and philosophical diversity, from religious pluralism in Italy to the shifting approach to ethnic and religious diversity in America, and from a sociological and historical perspective of religious plurality in Japan to an exploration of Brazilian religions, old and new. The transition from religious diversity to religious pluralism is one of the most important challenges that will reshape the role of religion in contemporary society. This book provides readers with insights that will help them better understand and interpret this unprecedented transition. (shrink)

IntroductionLarge corporations—from Apple to Volkswagen—are powerful; whereas their customers are much less powerful. But many observers believe that information and communication technologies are giving consumers weapons to level the playing field. Is this really true?From Theory to the Reality of Economic PowerTechnology and economic power share one characteristic: economic theory has long ignored them.Starting with the industrial revolution, technology has been the first driver of economic growth. But it is only a couple of centuries later that economic theory gave it (...) the place it deserves—as an engine of economic cycles.In classical economic theory, economic power did not exist. Market mechanisms excluded it—many suppliers sell to many buyers without any mutual influence and without any say on price. The only exception was monopolies, and their power was evil.The emergence of the modern corporation, the multiplication of oligopolies, and the Depression were all needed to slowly dem. (shrink)

One of the leading explanations for Canadian banking stability through the global financial crisis of 2007–08 is the Concentration-Stability Hypothesis (CSH), according to which the oligopoly of Canadian finance stabilised the credit system by cushioning it with above-average profits. These provided a buffer against fragility and incentives against excessive risk-taking. In this article, I critically examine CSH and show that classical Marxian analysis more effectively illuminates Canadian banking stability. I demonstrate that robust corporate profitability and capital accumulation before the (...) crisis strengthened the balance sheets of the banks and supported them through those turbulent years. Thus, financial stability is linked explicitly to broader economic stability, and the latter is linked to the profitability of business enterprise. (shrink)

AbstractCritics charge that agriculture has reached an unsustainable level of consolidation and expropriation, as exemplified by the supply-chain breakdown of the COVID-19 pandemic. Simultaneously, advocates suggest the current system serves consumers well by keeping prices low and access to choices high. At the center of this debate rests a disagreement over how to compute market power to identify monopolies and oligopolies. We propose a method to study power across different sectors by using Social Network Analysis to analyze key players, the (...) presence of core-periphery structures, and agricultural consolidation. We test our market network approach to power through an analysis of the top ten pork powerhouses. We find that Big Finance is closely tied to Big Ag, and that key players limit the capacity for more peripheral actors, like growers, equipment producers, and regional banks, to engage in the network. We identify system level risk of collapse and suggest pathways for reform. (shrink)

This article focuses on critical realist analysis of concrete processes of structure formation and realization of structural propensity. It aims to explain the reasons for the rise and fall of the neoliberal regime in Iceland that led to the extreme expansion of the Icelandic financial system and its crisis. The article argues that the neoliberal regime was actively constructed by economic and political actors within the framework of the particular structural characteristics of Iceland. It claims that rigid structural conditions due (...) to the very small size of the economy and severe problem of oligopoly undermined the neoliberal utopia of perfect market competition. In order to develop this argument, the paper observes how power elites actively affect public opinion and establish their hegemonic position in the political system. (shrink)

This paper defends the viability of de-idealization strategies in economic modeling against recent criticism. De-idealization occurs when an idealized assumption of a theoretical model is replaced with a more realistic one. Recently, some scholars have raised objections against the possibility or fruitfulness of de-idealizing economic models, suggesting that economists do not employ this kind of strategy. We present a detailed case study from the theory of industrial organization, discussing three different models, two of which can be construed as de-idealized versions (...) of the first (the so-called Bertrand model of oligopoly). We conclude that recent pessimism about de-idealization in economics is largely unfounded, and that de-idealization strategies are not only possible but also widely employed in economics. (shrink)

We investigate how a group of players might cooperate with each other within the setting of a non-cooperative game. We pursue two notions of partial cooperative equilibria that follow a modification of Nash’s best response rationality rather than a core-like approach. Partial cooperative Nash equilibrium treats non-cooperative players and the coalition of cooperators symmetrically, while the notion of partial cooperative leadership equilibrium assumes that the group of cooperators has a first-mover advantage. We prove existence theorems for both types of equilibria. (...) We look at three well-known applications under partial cooperation. In a game of voluntary provision of a public good we show that our two new equilibrium notions of partial cooperation coincide. In a modified Cournot oligopoly, we identify multiple equilibria of each type and show that a non-cooperator may have a higher payoff than a cooperator. In contrast, under partial cooperation in a symmetric Salop City game, a cooperator enjoys a higher return. (shrink)

The implementation of cyber-physical and similar systems depends on prevailing social and economic conditions. It is here argued that, if the effect of these technologies is to be benign, the current neo-liberal economy must change to a radically more cooperative model. In this paper, economy change means a thorough change to a qualitatively different kind of economy. It is contrasted with economic change, which is the kind of minor change usually considered in mainstream discourse. The importance of language is emphasised, (...) including that of techno-optimism and that of economic conservatism. Problems of injustice, strife, and ecological overload cannot be solved by conventional growth together with technical efficiency gains. Rather, a change is advocated from economics-as-usual to a broader concept, oikonomia, which takes into account all that contributes to a good life, including what cannot be represented quantitatively. Some elements of such a broader economy are discussed. It is argued that the benefits of technology can be enhanced and the ills reduced in such an economy. This is discussed in the case of cyber-physical systems under the headings employment, security, standards and oligopoly, and energy efficiency. The paper concludes that such systems, and similar technological developments, cannot resolve the problems of sustainability within an economy-as-usual model. If, however, there is the will to create a cooperative and sustainable economy, technology can contribute significantly to the resolution of present problems. (shrink)

This article analyses the results of a series of interviews conducted among leading firms in agrofood designed to assess the strategic importance of biotechnologies. Earlier analyses have emphasized either the revolutionary character of these technologies or the ability of oligopoly structure to contain the potential within existing market patterns. Our interviews would suggest that biotechnologies must be situated within the shift to a demand oriented food system. This has led on the on hand to a preoccupation with quality rather (...) than cost-cutting applications. It has also highlighted the inter-connectedness of the different phases of the agrofood system, since the incentive and the capacity to introduce innovations at any one point in the system depends on their acceptability to other actors in the agrofood chain.Biotechnologies have now become integrated into the competitive strategies of the leading actors but they remain ambiguously placed within the emerging “biotechnology” paradigm. The peculiarities of the agrofood system and the limitations of its industrialization have opened the way to strong consumer pressure based on the demand for quality and “natural” food and agriculture. It remains to be seen whether advanced biotechnologies can be assimilated within these priorities. (shrink)

A proposta central deste trabalho é refletir como a relação entre os grandes dados (big data) e o sujeito contemporâneo, explorando o conceito de Colonialismo de Dados. O estudo busca analisar as semelhanças entre as relações de dados na sociedade atual e o colonialismo histórico, examinando as implicações sociais, políticas e econômicas dessa dinâmica. Os autores argumentam que o colonialismo de dados envolve a extração e o gerenciamento universal de dados das pessoas, resultando em uma nova ordem social baseada no (...) rastreamento constante. Tem como objetivo analisar como o colonialismo de dados envolve a extração de recursos, representados pelos dados pessoais das pessoas, que são coletados, armazenados e utilizados por empresas para diversos fins econômicos. Esse fenômeno é sustentado por uma ideologia que promove a coleta e o uso de dados como algo benéfico e necessário, criando um ambiente onde os indivíduos são incentivados a compartilhar seus dados sem compreender completamente as implicações. Além disso, o artigo discute o papel do capitalismo nas relações de dados, destacando como o capitalismo afirma a identidade do "eu" como um ponto de referência único, mas também elementos essenciais da continuidade e transformação do self ao instalar vigilância automatizada no espaço do self. O estudo também aborda a importância da identidade pessoal como um elemento essencial, enfatizando a necessidade de abandonar a reivindicação de uma universalidade absoluta que caracteriza o colonialismo de dados. (shrink)