Conjectures in Cournot Duopoly under Cost Uncertainty
- 서울대학교 경제연구소
- Seoul Journal of Economics
- Seoul Journal of Economics Volume 24 No.1
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2011.0373 - 86 (13 pages)
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This paper presents a Cournot duopoly model based on a condition when firms are facing cost uncertainty under risk neutrality and risk aversion. Each firm conjectures about the rival's output level, and its cost function is assumed to be unknown to its rival. The Cournot model shows that the expected utility maximizing firms, under risk aversion, show different behaviors from the expected profit maximizing firms. This implies that each firm can increase or decrease its output, which depends on the interaction between both firms under cost uncertainty, assuming that both firms are riskaverse.
Abstract
Ⅰ. Introduction
Ⅱ. Basic Model
Ⅲ. Expected Profit Maximizing Behavior (Symmetric Uncertainty)
Ⅳ. Expected Utility Maximizing Behavior (Symmetric Uncertainty)
Ⅴ. Concluding Remarks
References
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