Adjustment to Equilibrium after a Demand Shock: A Strategic Interaction View

Lambertini, Luca ; Marattin, Luigi (2014) Adjustment to Equilibrium after a Demand Shock: A Strategic Interaction View. Bologna: Dipartimento di Scienze economiche DSE, p. 29. DOI 10.6092/unibo/amsacta/4043. In: Quaderni - Working Paper DSE (952). ISSN 2282-6483.
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Abstract

In this paper we verify the functioning of the standard neoclassical adjustment to equilibrium after a demand shock in a non-cooperative simultaneous Cournot duopoly with complete, symmetric and imperfect information. Our results show that in such a framework the adjustment to the long-run level of output by the entire industry or part of it is no longer guaranteed. We show that the size of the demand shock determines the nature and number of equilibria generated by strategic interaction, whereas the post-adjustment real wage level determines which equilibrium is actually obtained.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Lambertini, Luca
Marattin, Luigi
Keywords
Cournot duopoly, wage adjustment, demand shock
Subjects
ISSN
2282-6483
DOI
Deposit date
30 Jun 2014 12:13
Last modified
16 Mar 2015 14:58
URI

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