Interacting oligopolistic and oligopsonistic Cournot markets

Abstract

This paper considers the model of several interacting Cournot markets. Some of them are final goods markets, while the others are resource markets. The markets interact by sharing the same set of economic agents (producers), so that the latter are oligopsonists on resource markets and simultaneously oligopolists on goods markets. Each producer strategically chooses its supply volumes on each goods market and its purchase volume of resources in accordance with technology and expected supply effects on prices. We prove that in the case of linear demand and supply functions the model of interacting Cournot markets is reduced to a potential game; hence, the Nash equilibrium problem is equivalent to a mathematical programming problem. We also discuss the advantages and special features of such a representation of interacting oligopolistic and oligopsonistic markets.