Mixed oligopoly: Analysis of consistent equilibria

Vyacheslav V. Kalashnikov, Vladimir A. Bulavsky, Nataliya I. Kalashnykova, Junzo Watada, Diego De Jesús Hernández-Rodríguez

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    Abstract

    In this paper, a model of mixed oligopoly with conjectured variations equilibrium (CVE) is examined, in which one of the agents maximizes a convex combination of its net profit with the domestic social surplus. The agents' conjectures concern the price variations, which depend on the variations in their production outputs. Using the established existence and uniqueness results for the CVE (the exterior equilibrium ) for any fixed set of feasible conjectures, the notion of the interior equilibrium is introduced by developing a conjecture consistency criterion. Then, the existence theoremfor the interior equilibrium (defined as a CVE state with consistent conjectures ) is proven. When the convex combination coefficient tends to 1 (thus transforming the model into the mixed oligopoly in its extreme form), two trends are apparent. First, for private companies, the equilibrium with consistent conjectures becomes more proficient than the Cournot-Nash equilibrium. Second, there exists a (unique) value of the convex combination coefficient such that the private agent's aggregate profit is the same in both the above-mentioned equilibria, which makes subsidies to producers or consumers unnecessary.

    Original languageEnglish
    Pages (from-to)971-984
    Number of pages14
    JournalJournal of Advanced Computational Intelligence and Intelligent Informatics
    Volume18
    Issue number6
    Publication statusPublished - 2014 Nov 1

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    Keywords

    • Equilibrium theory
    • Game theory
    • Management engineering

    ASJC Scopus subject areas

    • Artificial Intelligence
    • Computer Vision and Pattern Recognition
    • Human-Computer Interaction

    Cite this

    Kalashnikov, V. V., Bulavsky, V. A., Kalashnykova, N. I., Watada, J., & Hernández-Rodríguez, D. D. J. (2014). Mixed oligopoly: Analysis of consistent equilibria. Journal of Advanced Computational Intelligence and Intelligent Informatics, 18(6), 971-984.