Multimarket Oligopolies with Restricted Market Access

  • Tobias Harks
  • Max Klimm
Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 8768)

Abstract

We study the existence of Cournot equilibria in multimarket oligopolies under the additional restriction that every firm may sell its product only to a limited number of markets simultaneously. This situation naturally arises if market entry is subject to a valid license and each firm holds a fixed number of licenses only, or, equivalently, if the firms’ short-term assets only suffice to serve up to a certain number of markets. We allow for firm-specific market reaction functions modeling heterogeneity among products. As our main result, we show the existence of a Cournot equilibrium under the following assumptions stated informally below: (i) cost functions are convex; (ii) the marginal return functions strictly decrease for strictly increased own quantities and non-decreased aggregated quantities; (iii) for every firm, the firm-specific price functions across markets are identical up to market-specific shifts. While assumptions (i) and (ii) are frequently imposed in the literature on single market oligopolies, only assumption (iii) seems limiting. We show, however, that if it is violated, there are games without a Cournot equilibrium.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2014

Authors and Affiliations

  • Tobias Harks
    • 1
  • Max Klimm
    • 2
  1. 1.Department of Quantitative EconomicsMaastricht UniversityThe Netherlands
  2. 2.Department of MathematicsTechnische Universität BerlinGermany

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