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Perfectly Competitive Markets as the Limits of Cournot Market

Novshek, William (1983) Perfectly Competitive Markets as the Limits of Cournot Market. Social Science Working Paper, 499. California Institute of Technology , Pasadena, CA. (Unpublished)

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We consider a perfectly competitive, partial equilibrium market for a single homogeneous good with a (bounded) continuum of infinitesimal firms. Cost functions are essentially unrestricted and are allowed to vary smoothly across firms. We introduce a sequence (net) of Cournot markets (each with a finite number of firms) which converge smoothly to the perfectly competitive limit in terms of both the inverse demand functions and the distribution of firm technologies and show that all markets sufficiently far along the sequence have a Cournot equilibrium and all the Cournot equilibria converge to the perfectly competitive equilibrium of the limit market.

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Additional Information:This research was supported by National Science Foundation Grant SES79-25690 at the Institute for Mathematical Studies in the Social Sciences, Stanford University. Published as Novshek, William. "Perfectly competitive markets as the limits of Cournot markets." Journal of Economic Theory 35.1 (1985): 72-82.
Group:Social Science Working Papers
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Series Name:Social Science Working Paper
Issue or Number:499
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:81693
Deposited By: Jacquelyn Bussone
Deposited On:21 Sep 2017 21:23
Last Modified:03 Oct 2019 18:45

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