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Cournot Competition, Forward Markets and Efficiency

Abstract : We build a model with two Cournot duopolists who produce at Time 0 wich is the date at which all demand is realized. N periods before time 0, the duopolists trade on a forward market for delivery at Time 0. Having made these contracts, they trade again at time ( − N + 1) for delivery at Time 0. etc. We show that, in equilibrium, each of them will sell forward which makes them worse off and makes consumers better off than if the forward market did not exist. When N, the number of forward trading periods prior to production, tends to infinity, the outcome tends to the competitive solution.
Mots-clés : Cournot Competition
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Contributor : Antoine Haldemann <>
Submitted on : Thursday, August 26, 2010 - 11:54:38 AM
Last modification on : Tuesday, December 18, 2012 - 1:19:14 PM

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Blaise Allaz, Jean-Luc Vila. Cournot Competition, Forward Markets and Efficiency. Journal of Economic Theory, Elsevier, 1993, 59 (1), pp.1-16. ⟨10.1006/jeth.1993.1001⟩. ⟨hal-00511806⟩

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