Empirical framework for Cournot oligopoly with private information
Gaurab Aryal,
Federico Zincenko
Abstract:We propose an empirical framework for asymmetric Cournot oligopoly with private information about variable costs. First, considering a linear demand for a homogeneous product with a random intercept, we characterize the Bayesian Cournot–Nash equilibrium. Then we establish the identification of the joint distribution of demand and firm‐specific cost distributions. Following the identification steps, we propose a likelihood‐based estimation method and apply it to the global market for crude oil and quantify the … Show more
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