The Neoclassical Economists Did Not Misinterpret Cournot on Competition: A Comment on Nomidis

Abstract

This is a comment on Nomidis' “Revisiting Cournot and Neoclassical Economics”. Using simple examples, the focus is on the conditions that lead to Cournot's competitive limit result, showcasing the connections between the Cournot model and competitive equilibrium. Citing original sources, it is argued that the Neoclassical economists did not misunderstand Cournot, as Nomidis asserts.

JOURNAL OF ECONOMIC LITERATURE CLASSIFICATION:

• B0
• C0
• D0

Keywords:

• Cournot oligopoly
• price-taking behaviour

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 Creedy (1999) for an account of Walras’s demand and supply curves, emphasising their general equilibrium aspects.

2 See Creedy (1992) for a detailed study of Jevons’s complex cases in the theory of exchange.

3 Here, we follow the standard interpretation of private ownership economies, in which firms are completely owned by consumers. Thus, firm’s profits can be nonzero, as in a short-run situation for instance, contributing to each consumer’s equilibrium wealth through dividends. This means that, in order to evaluate Pareto efficiency or the core, one uses only the welfare of the consumers, while firms are not ``independent actors' although they are of course maximising profits given equilibrium prices.

Additional information

Notes on contributors

Roberto Serrano

Roberto Serrano is the Harrison S. Kravis University Professor of Economics at Brown University in Providence, Rhode Island. His fields of interest are microeconomic theory and game theory. He has made contributions to several areas, including implementation theory and mechanism design, bargaining theory, the economics of risk, uncertainty and information, and the theory of general economic equilibrium. Prof. Serrano received his Ph.D. in economics from Harvard University in 1992.