Cournot Competition and Hit-and-Run Entry and Exit in a Teaching Experiment

Abstract

Instructors can use a computerized experiment to introduce students to imperfect competition in courses on introductory economics, industrial organization, game theory, and strategy and management. In addition to introducing students to strategic thinking in general, the experiment serves to demonstrate that profits of a firm fall as the number of competitors is increased in a market and that firms enter profitable markets. The authors have used the experiment in undergraduate classes on strategy and management as well as in master of business administration courses with great success.

Keywords:

• Cournot competition
• entry
• exit
• experiment
• teaching
• JEL codes: A2, L1, D4, C9