Journal of Economics and Management Volume 16, No. 1 March, 2020

A Differential Game Analysis of Free Entry Oligopoly with Sticky Prices

Masahiko Hattori

Faculty of Economics, Doshisha University, Japan.

Yasuhito Tanaka

Faculty of Economics, Doshisha University, Japan.

Abstract

This study analyzes a free entry oligopoly under general demand and cost functions via a differential game approach. We consider an open-loop dynamic oligopoly and a memoryless closed-loop dynamic oligopoly with sticky prices. The results show under some assumptions that the number of firms at the steady state in the open-loop dynamic oligopoly is fewer than the number of firms in the static equilibrium, and that the number of firms in the memoryless closed-loop dynamic oligopoly is fewer than the number of firms in the open-loop dynamic oligopoly.

Keywords：Free Entry Oligopoly; Differential Game; General Demand Function; General Cost Function; Open-Loop; Memoryless Closed-Loop.

JEL Classifications：C73, D43, L13.

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