Cournot competition with hyperbolic learning and myopic firms: A note

Abstract

In this note, we provide a Cournot oligopoly model of learning-by-doing that incorporates both learning spillovers and organizational forgetting, relaxing the commonly made assumption of linear learning by considering a hyperbolic learning curve that depends on both own and rivals’ experience. The analysis is conducted under the assumption of myopic firms. We show that conditions exist under which more competition, captured by an increase in the number of firms, worsens both productive and allocative efficiency at the steady-state equilibrium.