Empirical results about the Nash-Cournot equilibrium

• Published in: 2009 IEEE International Conference on Industrial Engineering and Engineering Management pp. 130 - 134
• Main Authors: Brill, E., Gonen, A., Fligel, E., Goldstein, E.
• Format: Conference Proceeding
• Language: English
• Published: IEEE 01-12-2009
• Subjects: Business simulation; Economic forecasting; Equations; Game theory; History; Iterative methods; Nash equilibrium; Nash-Cournot equilibrium; Oligopoly; Psychology; Technology management; Testing
• ISBN: 1424448697; 9781424448692
• ISSN: 2157-3611; 2157-362X
• DOI: 10.1109/IEEM.2009.5373409

The Nash-Cournot equilibrium theorem is based on some assumptions that usually do not hold true in reality. In this study, duopoly market equilibrium is tested by a group of players using a special business simulator that was adopted specifically for this task. The competing players knew their market in advance and had received their opponent's price, quantity of product and profits in the previous yearly quarter. Equipped with this knowledge, each participant (firm) had to make decisions regarding their current price, and quantity of products. The results showed that these decisions were mainly influenced by the difference in quantities and price, rather than the actual prices and quantities, as was expected. Moreover, if the prices and quantities of both firms were quite similar, they believed they had achieved a state of equilibrium, although they were sometimes quite far from it.