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Determination of the Cournot - Nash Equilibrium Outputs

# Determination of the Cournot - Nash Equilibrium Outputs

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Consider an Oligopoly in which the inverse demand function p ( N on top) Σ (I = 1 below) Xi on the right side) = a – b ( N on top) Σ (I = 1 below) Xi on the right side), a, ,b, > 0 and each firms costs c(xi) = cxi, 0 < c < a. First, given n, determine the cournot-nash equilibrium outputs, profits, deviation of price from the marginal cost and deadweight loss, then prove that all of these approach zero asymptotically as N tends towards infinity. Comment on the significance of this result.
Consider an Oligopoly in which the inverse demand function p ( N on top) Σ (I = 1 below) Xi on the right side) = a – b ( N on top) Σ (I = 1 below) Xi on the right side), a, ,b, > 0 and each firms costs c(xi) = cxi, 0 < c < a. First, given n, determine the cournot-nash equilibrium outputs, profits, deviation of price from the marginal cost and deadweight loss, then prove that all of these approach zero asymptotically as N tends towards infinity. Comment on the significance of this result.

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07/11/2013

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