Skip to main content
Log in

Game-theoretic models of an oligopoly market with nonlinear agent cost functions

  • Control in Social Economic Systems
  • Published:
Automation and Remote Control Aims and scope Submit manuscript

Abstract

We construct oligopoly models for nonlinear cost functions of agents under reflexive information. We obtain conditions for Nash equilibria under symmetric and asymmetric agent information in Cournot and Stackelberg reaction models (in case of one or several leaders).

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Similar content being viewed by others

References

  1. Neumann, J. and von Morgenstern, O., Theory of Games and Economic Behavior, New Jersey: Princeton Univ. Press, 1944.

    MATH  Google Scholar 

  2. Shubik, M., Strategy and Market Structure, New York: Wiley, 1959.

    MATH  Google Scholar 

  3. Cournot, A.A., Researches into the Mathematical Principles of the Theory of Wealth, London: Hafner, 1960. Original 1838.

    MATH  Google Scholar 

  4. Shapiro, C., Theories of Oligopoly Behavior, Discussion paper 126, Woodrow Wilson School, New Jersey: Princeton Univ. Press, 1987.

    Google Scholar 

  5. Nash, J., Non-Cooperative Games, Ann. Math., 1951, vol. 54, pp. 286–295.

    Article  MathSciNet  MATH  Google Scholar 

  6. Kohlberg, E. and Mertens, J., On the Strategic Stability of Equilibria, Econometrica, 1986, vol. 54, pp.1003–1037.

    Google Scholar 

  7. Kreps, D. and Wilson, R., Sequential Equilibria, Econometrica, 1982, vol. 50, pp. 863–894.

    Article  MathSciNet  MATH  Google Scholar 

  8. Hamilton, J.H. and Slutsky, S.M., Endogenous Timing in Duopoly Games: Stackelberg or Cournot Equilibria, Games Econom. Behavior, 1990, vol. 2, pp. 29–46.

    Article  MathSciNet  MATH  Google Scholar 

  9. Gao, X., Zhong, W., and Mei, S., Nonlinear Cournot Oligopoly Games with Isoelastic Demand Function: The Effects of Different Behavior Rules, Commun. Nonlin. Sci. Numer. Simulat., 2012, vol. 17 (12), pp. 5249–5255.

    Article  MathSciNet  MATH  Google Scholar 

  10. Kalashnikov, V.V., Bulavsky, V.A., Kalashnykova, N.I., and Castillo, F.J., Mixed Oligopoly with Consistent Conjectures, Eur. J. Oper. Res., 2011, vol. 210, no. 3, pp. 729–735.

    Article  MathSciNet  MATH  Google Scholar 

  11. Bowley, A.L., The Mathematical Groundwork of Economics, Oxford: Oxford Univ. Press, 1924.

    MATH  Google Scholar 

  12. Novikov, D. and Chkhartishvili, A., Reflexion and Control: Mathematical Models, Leiden: CRC Press, 2014.

    MATH  Google Scholar 

  13. Kozlova, T.V. and Filatov, A.N., Classification of Non-Cooperative Models of Oligopoly, Vest. Magnitogor. Gos. Tekh. Univ., 2005, no. 2. (10), pp. 30–32.

    Google Scholar 

  14. Vasin, A.A., Gusev, A.G., and Sharikova, A.A., Game-Theoretic Analysis of Single-Stage and Two-Stage Auctions for a Uniform Good, Upravlen. Bol’shimi Sist., 2010, no. 31–1, pp. 210–238.

    Google Scholar 

  15. Karmarkar, U.S. and Rajaram, K., Aggregate Production Planning for Process Industries under Oligopoly Competition, Eur. J. Oper. Res., 2012, vol. 223 (3), pp. 680–689.

    Article  MATH  Google Scholar 

  16. Dyusushe, O.M., Static Cournot–Nash Equilibrium and Reflexive Oligopoly Games: The Case of Linear Demand and Cost Functions, Ekon. Zh. Vyssh. Shkol. Ekon., 2006, no. 1, pp. 3–32.

    Google Scholar 

  17. Ledvina, A. and Sigar, R., Oligopoly Games under Asymmetric Costs and an Application to Energy Production, Math. Financial Econ., 2012, vol. 6 (4), pp. 261–293.

    Article  MathSciNet  MATH  Google Scholar 

  18. Mitsel’, A.A. and Kozlov, S.V., Models of Oligopoly, Izv. Tomsk Politekh. Univ., 2007, no. 6, vol. 311, pp. 4–8.

    Google Scholar 

  19. Gozman, I.Ya. and Rutkovskii, N.V., Models of Oligopoly, Vest. Novgorod. Gos. Univ., 2009, no. 50, pp. 21–26.

    Google Scholar 

  20. Currarini, S. and Marini, M.A., Sequential Play and Cartel Stability in Cournot Oligopoly, Appl. Math. Sci., 2013, vol. 7 (1–4), pp. 197–200.

    Google Scholar 

  21. Pon’kina, E.V., Manicheva, A.S., and Komarov, P.V., Model of a Distributed Market with Barriers on Entry under Bounded Production Capacities, Izv. Altaisk. Gos. Univ., 2013, vol. 2, no. 1 (77), pp. 97–100.

    Article  Google Scholar 

  22. Aizenberg, N.I., Zorkal’tsev, V.I., and Kiseleva, M.A., Imperfect Competition Models in Application to the Analysis of the Electrical Power Market of Siberia, Zh. Novoi Ekon. Assotsiatsii, 2013, no. 2 (18), pp. 62–88.

    Google Scholar 

  23. von Stackelberg, H., Market Structure and Equilibrium, Berlin: Springer-Verlag, 2011.

    Book  MATH  Google Scholar 

  24. Day, C.J., Hobbs, B.F., and Pang, J., Oligopoly Competition in Power Networks: A Conjectured Supply Function Approach, IEEE Trans. Power Syst., 2002, vol. 17 (3), pp. 597–607.

    Article  Google Scholar 

  25. Kaverina, I.A. and Kaverin, S.V., Optimal Pricing Strategies in an Oligopoly with a Leader, Vest. Volzh. Univ., 2013, no. 1 (27), pp. 1–6.

    Google Scholar 

  26. Nechaev, V.I. and Nechaeva, E.S., Choosing the Pricing Strategy for a Company under Differentiated Duopoly, Izv. Tul. Gos. Univ., Econ. Yurid. Nauk., 2011, nos. 1–2, pp. 116–120.

    Google Scholar 

  27. Filatov, A.Yu., Models of Oligopoly: State of the Art, in Teoriya i metody soglasovaniya reshenii (Theory and Methods of Coordinating Decisions), Novosibirsk: Nauka, 2009, pp. 29–60.

    Google Scholar 

  28. Vasin, L.A. and Nechaev, Yu.V., Analysis of Models of Duopoly for Unequal Costs of the Participants, Izv. Tul. Gos. Univ., Econ. Yurid. Nauk., 2011, nos. 1–2, pp. 109–116.

    Google Scholar 

  29. Postan, M.Ya. and Savel’eva, I.V., A Method for Finding Equilibrium Solutions for Port Operators in a Competitive Environment of Oligopoly Type, Tekhnol. Audit. Rezerv. Proizvod., 2014, vol. 4, no. 2 (18), pp. 58–63.

    Google Scholar 

  30. Ino, H. and Matsumura, T., Welfare-Improving Effect of a Small Number of Followers in a Stackelberg Model, B.E. J. Theoret. Econom., 2016, vol. 16 (1), pp. 243–265.

    MathSciNet  Google Scholar 

  31. Ereshko, F.I., Modelirovanie refleksivnykh strategii v upravlyaemykh sistemakh (Modeling Reflexive Strategies in Controllable Systems), Moscow: Vychisl. Tsentr Ross. Akad. Nauk, 2001.

    Google Scholar 

  32. Korepanov, V.O., Controlling Reflexive Behaviour of Agents in Cournot Oligopoly Models, Upravlen. Bol’shimi Sist., 2010, no. 31, pp. 225–249.

    Google Scholar 

  33. Gontarev, A.V. and Chkhartishvili, A.G., On Explicit and Hidden Coalitions in Reflexive Games, Upravlen. Bol’shimi Sist., 2009, no. 26, pp. 47–63.

    Google Scholar 

  34. Algazin, G.I., Information Exchange and Information Equilibrium in Basic Game-Theoretic Models of a Competitive Market, Izv. Altaisk. Gos. Univ., 2013, no. 1–1 (77), pp. 79–82.

    Google Scholar 

  35. Algazin, G.I. and Algazina, Yu.G., True and False Information Equilibrium in a Model of a Trading System, Upravlen. Bol’shimi Sist., 2016, no. 60, pp. 119–138.

    Google Scholar 

  36. Liu, Y., Gao, L., and Guan, J., Marketing Strategy of Price Competition and Product Differentiation in Duopoly Enterprises with Asymmetric Information, Int. Conf. Servic. Syst. Servic. Management, Proc. ICSSSM’05, 2005, vol. 1, pp. 665–668.

    Google Scholar 

  37. Gilpatric, S.M. and Li, Y., Information Value under Demand Uncertainty and Endogenous Market Leadership, Econ. Inquiry, 2015, vol. 53 (1), pp. 589–603.

    Article  Google Scholar 

  38. Singh, N. and Vives, X., Price and Quantity Competition in a Differential Duopoly, Rand J. Econ., 1984, vol. 15, pp. 546–554.

    Article  Google Scholar 

  39. Walters, A.A., Production and Cost Functions: An Econometric Survey, Econometrica, 1963, vol. 31, no. 1. Translated under the title Proizvodstvennye funktsii i funktsii zatrat: ekonometricheskii obzor, in Teoriya firmy, vol. 2, St. Petersburg: Ekonom. Shkola, 2000, pp. 160–204.

    Google Scholar 

  40. Burkov, V.N., Goubko, M., Korgin, N., and Novikov, D., Introduction to the Theory of Control in Organizations, Boca Raton: CRC Press, 2015.

    Book  MATH  Google Scholar 

  41. Bresnahan, T.F., Duopoly Models with Consistent Conjectures, Am. Econ. Rev., 1981, vol. 71, no. 5, pp. 934–945.

    Google Scholar 

  42. Nikaido, Kh. and Isoda, K., A Note on Coalition-Free Convex Games, in Beskonechnye antagonisticheskie igry (Infinite Antagonistic Games), Vorob’ev, N.N., Ed., Moscow: Fizmatgiz, 1963, pp. 449–458.

    Google Scholar 

  43. Geras’kin, M.I. and Chkhartishvili, A.G., Structural Modeling of Oligopoly Market under the Nonlinear Functions of Demand and Agents’ Costs, Autom. Remote Control, 2017, vol. 78, no. 2, pp. 332–348.

    Article  MathSciNet  MATH  Google Scholar 

  44. Torres, R. and Palma, R., Oligopoly Generation Expansion: A Multi-Leader Multi-Follower Approach, IEEE Latin Am. Trans., 2013, vol. 11 (4), pp. 1029–1035.

    Article  Google Scholar 

  45. Korn, G.A. and Korn, T.M., Mathematical Handbook for Scientists and Engineers, New York: McGraw-Hill, 1968. Translated under the title Spravochnik po matematike, Moscow: Nauka, 1974.

    MATH  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to M. I. Geras’kin.

Additional information

Original Russian Text © M.I. Geras’kin, A.G. Chkhartishvili, 2017, published in Avtomatika i Telemekhanika, 2017, No. 9, pp. 106–130.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Geras’kin, M.I., Chkhartishvili, A.G. Game-theoretic models of an oligopoly market with nonlinear agent cost functions. Autom Remote Control 78, 1631–1650 (2017). https://doi.org/10.1134/S0005117917090089

Download citation

  • Received:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1134/S0005117917090089

Keywords

Navigation