Economics, Econometrics and Finance
4 years ago

Infinite time horizon gives strategic agents market power in equilibrium.

RePEc: Research Papers in Economics
Intertemporal Cournot and Walras equilibrium: An illustration
Tito Cordella, Manjira Datta

Paper Summary

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The article introduces a new idea called intertemporal Cournot equilibrium in a dynamic economic model. It shows that when there are many strategic players, this equilibrium becomes like intertemporal Walras equilibrium only if each player has a limited time frame. If the time frame is unlimited, each player can have significant market power no matter how many players there are.