Oligopoly Games and the Cournot–bertrand Model: A Survey

Abstract

Traditional oligopoly models hold that firms compete in the same strategic variable, output (Cournot) or price (Bertrand). Alternatively, a hybrid model allows some firms to compete in output and other firms to compete in price, also known as the Cournot–Bertrand model. When the choice of strategic variable is endogenous, the established dominant strategy is output competition. A growing body of work demonstrates, however, that the Cournot–Bertrand outcome can be a subgame‐perfect Nash equilibrium in the presence of market asymmetries. Observations of real‐world markets consistent with Cournot–Bertrand behavior bolster justification for the model and have stimulated an impressive and evolving literature on advances and applications. We lay out the roots of the Cournot–Bertrand model and explore a number of model developments. We categorize 12 primary models in the literature based on alternative assumptions. In particular, some authors consider when the timing of play as well as the choice of strategic variable are endogenous. Altogether, this research identifies when Cournot–Bertrand behavior can emerge in a dynamic setting and under alternative market conditions. We also review the Cournot–Bertrand model applications in the fields of international economics, industrial organization, labor, and public economics. We expect the literature to continue to expand in the future.

Competition between Physical and Electronic Content Retailers

“…Fanti and Scrimitore (2019) extend Arya et al (2008) to investigate price versus quantity competition in market structures similar to ours: a vertically integrated firm supplies upstream inputs to an independent downstream firm, which is its downstream competitor, and each of them chooses price or quantity as its strategic variable before they compete in the downstream market, as in Singh and Vives (1984) (see also Bylka and Komar (1976); Reisinger and Ressner (2009), and the comprehensive survey of Tremblay and Tremblay (2019)). Their main themes are the endogenous choices of those strategic variables and the implications of the results.…”

Joint Optimization of Quota Policy Design and Electric Market Behavior Based on Renewable Portfolio Standard in China

“…The most important difficulty is how to get the game solution under different policy parameters which best accord with reality. The existing strategies for solving this problem can be divided into: 1) completely rational game [13], [14], that is, it is assumed that the players of the game participate in the decision that has the greatest benefit to their side from the beginning to the end, such as Cournot model [15], [16], Stark model [17], [18], etc. ; 2) The bounded rational game [19], [20], that is, the player of the game needs to continuously learn the strategy rather than realize the optimal choice at one time.…”

Nonlinear Dynamics of Cournot Duopoly Game: When One Firm Considers Social Welfare

“…ere are some other updating mechanisms that have been reported in the literature. For instance, Long and Huang [14], Agiza and Elsadany [15], Kopel [16], Elabbasy et al [17,18], Askar and Abouhawwash [19], Hommes [20], Tremblay et al [21], Ahmed et al [22], Baiardi and Naimzada [23], Fanti et al [24], Elsadany and Awad [25], Tremblay and Tremblay [26], Askar and Al-Khedhairi [27], and Gao and Du [28].…”