Stability of the Cournot-Nash 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 10-719, Poland


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 Cournot-Nash 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 Cournot-Nash 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 short-term 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.


Auxiliary resources (full texts, presentations, posters, etc.)
  1. PRESENTATION: Stability of the Cournot-Nash equilibrium in standard oligopoly models, PDF document, version 1.4, 1.2MB
  • Legal notice:

    The above materials are subject to Publisher's copyright and the Author(s) intellectual rights. Without limiting Author(s) rights under respective Copyright Transfer Agreement, no part of the above documents may be reproduced, stored in or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), or for any purpose, without the express written permission of Pielaszek Research Corporation, the Publisher.
    Express permission from the Author(s) is required to use the above materials for academic purposes, such as lectures or scientific presentations. In such a case, proper references including Author(s) name(s) and URL of this webpage: must be provided.


Related papers
  1. Logistic map in economics
  2. Determinants of mass poverty in the contemporary global economy
  3. Application of the four colour theorem to identify regional poles and main lines of economic growth
  4. The mechanism of transformation of global business cycles into dynamics of regional real estate markets
  5. Prosumption in the public administration sector
  6. Econophysics as a new school of economic thought: twenty years of research
  7. Basic sources of economic complexity
  8. Vortex stabilization of market equilibrium in theory and in practice of economics
  9. Deterministic chaos and catastrophes in business cycle theory

Presentation: Poster at 5 Ogólnopolskie Sympozjum "Fizyka w Ekonomii i Naukach Społecznych", by Aleksander Jakimowicz
See On-line Journal of 5 Ogólnopolskie Sympozjum "Fizyka w Ekonomii i Naukach Społecznych"

Submitted: 2010-10-12 12:08
Revised:   2010-10-12 12:11