S-Space College of Social Sciences (사회과학대학) Institute of Economics Research (경제연구소) Seoul Journal of Economics Seoul Journal of Economics vol.24 no.1~4 (2011)
Conjectures in Cournot Duopoly under Cost Uncertainty
- Ryu, Suyeol; Kim, Iltae
- Issue Date
- Seoul Journal of Economics, Vol.24 No.1, pp. 73-86
- 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.