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Local stability of the Cournot solution with increasing heterogeneous competitors |
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| Institution: | 1. Saint Petersburg State University, 7/9 Universitetskaya nab., Saint Petersburg 199034, Russia;2. Department of Applied Mathematics, Northwestern Polytechnical University, Xian, Shaanxi 710072, PR China |
| Abstract: | In this paper we try to solve a paradox related to the results of Theocharis (1960). When the number of competitors increases the Cournot–Nash equilibrium loses stability. We relax the assumption about homogeneity in the decision mechanism and show that if we admit heterogeneity than by increasing the number of competitors the stability region on the parameters’ space may enlarge instead of shrinking. |
| Keywords: | Cournot oligopoly Nash equilibrium Heterogeneous firms Isoelastic demand function |
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