Abstract
This paper considers Cournot-Nash equilibrium with free entry among identical firms which possess large minimum efficient scale. We consider equilibrium in which all firms receive equal treatment by allowing firms to play mixed strategies. In particular, firms randomize over the decision to enter or not. It is shown that symmetric Cournot-Nash equilibrium in mixed strategies exists when there is a finite number of potential entrants. We then consider a sequence of such mixed strategy equilibria as the number of potential entrants gets large. It is shown that such a sequence always has a convergent subsequence whose limit is a symmetric equilibrium in mixed strategies when the number of potential entrants is infinite. An example is given which shows that increased competition, in the form of a larger pool of potential entrants, is socially harmful in that expected social surplus is decreasing in the number of potential entrants.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
