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Conjectures in Cournot Duopoly under Cost Uncertainty

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Authors
Ryu, Suyeol; Kim, Iltae
Issue Date
2011-01
Publisher
Institute of Economic Research, Seoul National University
Citation
Seoul Journal of Economics, Vol.24 No.1, pp. 73-86
Keywords
Cournot equilibriumCost uncertaintyRisk aversion
Abstract
This paper presents a Cournot duopoly model based on a condition

when firms are facing cost uncertainty under risk neutrality

and risk aversion. Each firm conjectures about the rivals output

level, and its cost function is assumed to be unknown to its rival.

The Cournot model shows that the expected utility maximizing firms,

under risk aversion, show different behaviors from the expected

profit maximizing firms. This implies that each firm can increase or

decrease its output, which depends on the interaction between both

firms under cost uncertainty, assuming that both firms are riskaverse.
ISSN
1225-0279
Language
English
URI
https://hdl.handle.net/10371/73140
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.24 no.1~4 (2011)
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