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JACIII Vol.18 No.6 pp. 971-984
doi: 10.20965/jaciii.2014.p0971
(2014)

Paper:

Mixed Oligopoly: Analysis of Consistent Equilibria

Vyacheslav V. Kalashnikov*1,*2,*3, Vladimir A. Bulavsky*2,
Nataliya I. Kalashnykova*3,*4, Junzo Watada*5,
and Diego de Jesús Hernández-Rodríguez*4

*1Tecnológico de Monterrey (ITESM), Campus Monterrey, 64849, Mexico

*2Central Economics & Mathematics Institute (CEMI), Russian Academy of Sciences (RAS), Moscow 117418, Russia

*3Sumy State University, Sumy 40007, Ukraine

*4Department of Physics & Maths (FCFM), Universidad Autónoma de Nuevo León (UANL), San Nicolás de los Garza, 66450, Mexico

*5Graduate School of Information, Production and Systems, Waseda University, 2-7 Hibikino, Wakamatsuku, Kitakyushu, Fukuoka 808-0135, Japan

Received:
February 14, 2014
Accepted:
May 31, 2014
Published:
November 20, 2014
Keywords:
management engineering, game theory, equilibrium theory
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.

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Last updated on Sep. 21, 2017