The Price of Anarchy of Cournot Oligopoly

  • Xiaolei Guo
  • Hai Yang
Part of the Lecture Notes in Computer Science book series (LNCS, volume 3828)


Cournot oligopoly is typically inefficient in maximizing social welfare which is total surplus of consumer and producer. This paper quantifies the inefficiency of Cournot oligopoly with the term “price of anarchy”, i.e. the worst-case ratio of the maximum possible social welfare to the social welfare at equilibrium. With a parameterization of the equilibrium market share distribution, the inefficiency bounds are dependent on equilibrium market shares as well as market demand and number of firms. Equilibrium market share parameters are practically observable and analytically manageable. As a result, the price of anarchy of Cournot oligopoly established in this paper is applicable to both practical estimation and theoretical analysis.


Social Welfare Congestion Game Inverse Demand Function Practical Estimation Perfect Competition 
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Copyright information

© Springer-Verlag Berlin Heidelberg 2005

Authors and Affiliations

  • Xiaolei Guo
    • 1
  • Hai Yang
    • 1
  1. 1.Department of Civil EngineeringThe Hong Kong University of Science and TechnologyKowloon, Hong KongChina

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