# Intertemporal Non-separability and Dynamic Oligopoly

## Abstract

We construct a framework for modeling dynamic Cournot oligopoly. We consider models where utility maximizing consumers give rise to demand functions that depend on current and prior period prices. Future demand depends on the current price and consumers, and firms must take this into account when making their decisions. Focusing on problems that yield dynamic demand functions that are linear in current and prior period price, we characterize the unique Markov perfect equilibrium in linear strategies. We then demonstrate the applicability of our framework through a series of practical examples.

## Keywords

Dynamic oligopoly Durable goods Habit persistence Inventories## JEL Classification

C73 D21 D43## Notes

### Acknowledgements

We thank two anonymous referees for helpful comments and suggestions. The views expressed are those of the authors and do not necessarily reflect those of the Bureau of Labor Statistics.

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