Stability of the CournotNash equilibrium in standard oligopoly models 
Aleksander Jakimowicz 
University of Warmia and Mazury in Olsztyn, Faculty of Economic Sciences, Department of Macroeconomics (UWM), M. Oczapowskiego 4, Olsztyn 10719, Poland 
Abstract 
The 19c. physics is a cognitive archetype of contemporary economics, where static, linear, closed systems that head for thermodynamic equilibrium were of great importance. In this standard of scientific knowledge were included selfish aspirations of agents, which served to prove stability of market equilibrium. The strive of entrepreneurs after profit maximization brings economic systems to a stable CournotNash state of equilibrium, which is determined by the point of crossing of reaction curves. This type of reasoning still sets standards for education of microeconomics. Meanwhile, numerical explorations of simple, standard, nonlinear models of oligopoly prove that CournotNash points are stable only over shortest periods. These are periods in which variables are changing (production values), and parameters (marginal costs) remain constant. According to a convention adopted in economics, in short periods various kinds of costs can change, including marginal costs. The only unchanging category in these periods are fixed costs. The postulate of profit maximization induces entrepreneurs to lower marginal costs. It provokes drifting of markets along shortterm equilibrium states towards states of higher complexity. States far from equilibrium are natural market states. It contradicts the basics of traditional microeconomics. Selfish aspirations of agents do not guarantee stability of market equilibrium. 
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Presentation: Poster at 5 Ogólnopolskie Sympozjum "Fizyka w Ekonomii i Naukach Społecznych", by Aleksander Jakimowicz Submitted: 20101012 12:08 Revised: 20101012 12:11 