A theory of dynamic oligopoly, III. Cournot competition

Eric Maskin*, Jean Tirole

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    86 Scopus citations


    We study the Markov perfect equilibrium (MPE) of an alternating move, infinite horizon duopoly model where the strategic variable is quantity. We exhibit a pair of difference-differential equations that, when they exist, differentiable MPE strategies satisfy. For quadratic payoff functions, we solve these equations in closed form and demonstrate that the MPE corresponding to the solution is the limit of the finite horizon equilibrium as the horizon tends to infinity. We conclude with a discussion of adjustment costs and endogenization of the timing.

    Original languageEnglish (US)
    Pages (from-to)947-968
    Number of pages22
    JournalEuropean Economic Review
    Issue number4
    StatePublished - Jun 1987

    ASJC Scopus subject areas

    • Finance
    • Economics and Econometrics


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