A Multiobjective Model of Oligopolies under Uncertainty

Carl Chiarella; Ferenc Szidarovszky

Authors

Carl Chiarella School of Finance and Economics, University of Technology, Sydney, P.O. Box 123, Broadway, NSW 2007, Australia.
Ferenc Szidarovszky Systems & Industrial Engineering Department, The University of Arizona, Tucson, Arizona, 85721-0020, USA.

Keywords:

Uncertainty, n-person games, multiobjective optimization

Abstract

It is assumed that in an n-firm single-product oligopoly without product differentiation the firms face an uncertain price function, which is considered random by the firms. At each time period each firm simultaneously maximizes its expected profit and minimizes the variance of the profit since it wants to receive as high as possible profit with the least possible uncertainty. It is assumed that the best response of each firm is obtained by the weighting method. We show the existence of a unique equilibrium, and investigate the local stability of the equilibrium.