Hostname: page-component-7b7567c8c-fvjsw Total loading time: 0 Render date: 2026-11-13T02:51:26.520Z Has data issue: false hasContentIssue false
  • English
  • Français

Cost Structures and Nash Play in Repeated Cournot Games

Published online by Cambridge University Press:  14 March 2025

Douglas D. Davis,
Robert J. Reilly and
Bart J. Wilson
Douglas D. Davis
Affiliation:
Department of Economics, Virginia Commonwealth University, Richmond, VA 23284-4000, USA
Robert J. Reilly
Affiliation:
Department of Economics, Virginia Commonwealth University, Richmond, VA 23284-4000, USA
Bart J. Wilson
Affiliation:
Interdisciplinary Center for Economic Science, George Mason University, Fairfax, VA 22030, USA
Get accessRights & Permissions [Opens in a new window]

Abstract

This paper reports an experiment designed to assess the effects of a rotation in the marginal cost curve on convergence in a repeated Cournot triopoly. Increasing the cost curve's slope both reduces the serially-undominated set to the Nash prediction, and increases the peakedness of earnings. We observe higher rates of Nash equilibrium play in the design with the steeper marginal cost schedule, but only when participants are also rematched after each decision. Examination of response patterns suggests that the treatment with a steeper marginal cost curve and with a re-matching of participants across periods induces the selection of Nash Consistent responses.

Keywords

experimental economicsCournot competitionserially undominated equilibria

JEL classification

D43: Oligopoly and Other Forms of Market ImperfectionC91: Laboratory, Individual BehaviorC72: Noncooperative Games

Information

Type
Research Article
Information
Experimental Economics , Volume 6 , Issue 2 , October 2003, pp. 209 - 226
Copyright
Copyright © 2003 Economic Science Association

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Article purchase

Temporarily unavailable

References

Bernheim, D. (1984). “Rationalizable Strategic Behavior.” Econometrica. 52, 1007–1028.CrossRefGoogle Scholar
Capra, M., Goeree, J.K., Gomez, R., and Holt, C.A. (1999). “Anomalous Behavior in a Traveler's Dilemma?” American Economic Review. 89, 678–690.CrossRefGoogle Scholar
Davis, D.D. (1999). “Advance Production and Cournot Outcomes: An Experimental Investigation.” Journal of Economic Behavior and Organization. 40, 59–79.10.1016/S0167-2681(99)00042-6CrossRefGoogle Scholar
Davis, D.D. (2002). “Strategic Interactions, Market Information and Mergers in Differentiated Product Markets: An Experimental Investigation.” International Journal of Industrial Organization. 20, 1277–1312.CrossRefGoogle Scholar
Fisher, F. (1961). “The Stability of the Cournot Solution: The Effects of Speeds of Adjustment and Increasing Marginal Costs.” Review of Economic Studies. 74, 125–135.CrossRefGoogle Scholar
Fouraker, L.E. and Siegel, S. (1963). Bargaining Behavior. New York: McGraw-Hill.Google Scholar
Holt, C.A. (1985). “An Experimental Test of the Consistent Conjectures Hypothesis.” American Economic Review. 75, 314–25.Google Scholar
Holt, C.A. (1995). “Industrial Organization: A Survey of Laboratory Research.” In Roth, Alvin and Kagel, John (eds.), Handbook of Experimental Economics, Princeton: Princeton University Press.Google Scholar
Huck, S., Normann, H.-T., and Oechssler, J. (1998). “Best Reply Behavior and Imitation in a Cournot Experiment.” Working Paper, Humboldt University, Berlin Germany.Google Scholar
Huck, S., Normann, H.-T., and Oechssler, J. (1999). “Learning in Cournot Oligopoly—An Experiment.” Economic Journal. 109, c80–c95.10.1111/1468-0297.00418CrossRefGoogle Scholar
McKelvey, R.D. and Palfrey, T.R. (1992). “An Experimental Study of the Centipede Game.” Econometrica. 60, 803–836.10.2307/2951567CrossRefGoogle Scholar
Milgrom, P. and John, R. (1991). “Adaptive and Sophisticated Learning in Normal Form Games.” Games and Economics Behavior. 3, 82–100.CrossRefGoogle Scholar
Ledyard, J.O. (1995). “Public Goods: A Survey of Experimental Research.” In Roth, Alvin and Kagel, John (eds.), Handbook of Experimental Economics, Princeton: Princeton University Press.Google Scholar
Phillips, O.R. and Mason, C.F. (1992). “Mutual Forbearance in Experimental Conglomerate Markets.” RAND Journal of Economics. 23, 395–414.10.2307/2555870CrossRefGoogle Scholar
Rassenti, S., Reynolds, S.S., Smith, V.L., and Szidarovszky, F. (2000). “Adaptation and Convergence of Behavior in Repeated Experimental Cournot Games.” Journal of Economic Behavior and Organization. 41(2), 117–146.10.1016/S0167-2681(99)00090-6CrossRefGoogle Scholar
Theocharis, R.D. (1960). “On the Stability of the Cournot Solution to the Oligopoly Problem.” Review of Economic Studies. 27, 133–134.10.2307/2296135CrossRefGoogle Scholar
Wellford, C.P. (1990). “Horizontal Mergers: Policy and Performance.” Ph.D. Dissertation, University of Arizona.Google Scholar
Vega-Redondo, F. (1997). “The Evolution of Walrasian Behavior.” Econometrica. 65, 375–84.10.2307/2171898CrossRefGoogle Scholar