The stability of dynamic [formula omitted]-person Cournot games with strategic adjustment costs

Abstract

In certain Cournot games, firms have to incur additional costs when adjusting production plans, such as scheduling of employees and machines, which is usually neglected. Therefore, by designing a quadratic cost function, these strategic adjustment costs are introduced in a dynamic n-person Cournot game with adaptive expectation. And both theoretical and numerical analyses demonstrate that the costs improve the stability of the original Cournot–Nash equilibrium. This implies that the Cournot–Nash equilibria with over three firms are not as fragile as previously believed.