Dynamic Cournot oligopoly game based on general isoelastic demand

Abstract

This paper explores a nonlinear Cournot oligopoly with n firms displaying general isoelastic demand. The marginal profits-based gradient rule and the expectation rule Local Monopolistic Approximation were employed in two Cournot oligopoly games. Nash equilibrium stability analysis is carried out on each of the two games to throw light on the effects of demand elasticity and other parameters on the dynamics of the game. Our results show that the influence of demand elasticity on stability depends on firms’ expectation rules.