A nonparametric analysis of the Cournot model
Carvajal, Andrés M. and Quah, John K.-H. (2009) A nonparametric analysis of the Cournot model. Working Paper. Department of Economics, University of Warwick: University of Warwick. The Warwick Economics Research Paper Series (TWERPS), Vol.2009 (No.922).
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An observer makes a number of observations of an industry producing a homogeneous good. Each observation consists of the market price, the output of individual firms and perhaps information on each firm's production cost. We provide various tests (typically, linear programs) with which the observer can determine if the data set is consistent with the hypothesis that firms in this industry are playing a Cournot game at each observation. When cost information is wholly or partially unavailable, these tests could potentially be used to derive cost information on the firms. This paper is a contribution to the literature that aims to characterize (in various contexts) the restrictions that a data set must satisfy for it to be consistent with Nash outcomes in a game. It is also inspired by the seminal result of Afriat (and the subsequent literature) which addresses similar issues in the context of consumer demand, though one important technical difference from most of these results is that the objective functions of firms in a Cournot game are not necessarily quasiconcave.
|Item Type:||Working or Discussion Paper (Working Paper)|
|Subjects:||H Social Sciences > HB Economic Theory|
|Divisions:||Faculty of Social Sciences > Economics|
|Library of Congress Subject Headings (LCSH):||Economics -- Mathematical models, Industries -- Linear programming, Industrial organization (Economic theory)|
|Series Name:||The Warwick Economics Research Paper Series (TWERPS)|
|Publisher:||University of Warwick|
|Place of Publication:||Department of Economics, University of Warwick|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
|Funder:||Economic and Social Research Council (Great Britain) (ESRC)|
|Grant number:||RES-000-22-3771 (ESRC), RES-000-22-3187 (ESRC)|
AFRIAT, S. (1967): "The construction of a utility function from expenditure data," Interna-
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