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Cournot Competition on a Network of Markets and Firms

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Working paper
Author/s: 
Rahmi IlkiliƧ
Issue number: 
2009.032
Publisher: 
FEEM
Year: 
2009
Suppose markets and firms are connected in a bi-partite network, where firms can only supply to the markets they are connected to. Firms compete a la Cournot and decide how much to supply to each market they have a link with. We assume that markets have linear demand functions and firms have convex quadratic cost functions. We show there exists a unique equilibrium in any given network of firms and markets. We provide a formula which expresses the quantities at an equilibrium as a function of a network centrality measure.
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