Conjectural variations strategies in accelerated cournot games

Ehud Kalai*, William Stanford

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

19 Scopus citations

Abstract

A family of constant conjectural variations strategies is defined and examined in the natural context of infinitely repeated Cournot duopoly games with discounting. It is shown that any pair of linear reaction functions in the family gives rise to a unique pair of quantities in stationary equilibrium. As the conjectures and discount parameter vary, the sum of the stationary quantities will vary anywhere between the competitive and the monopoly outcomes. Equilibrium is strongly stable and credible (in the sense of exhibiting a variation of Selten's subgame perfection) provided that firms can react quickly enough to one another's actions.

Original languageEnglish (US)
Pages (from-to)133-152
Number of pages20
JournalInternational Journal of Industrial Organization
Volume3
Issue number2
DOIs
StatePublished - Jan 1 1985

ASJC Scopus subject areas

  • Industrial relations
  • Strategy and Management

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