A Dynamic Model of Differentiated Oligopoly with Capital Accumulation

Abstract

We consider a dynamic model of differentiated oligopoly with capital accumulation. We prove that the model may converge to either a steady state replicating the optimum of the static problem, or a steady state driven by capital accumulation alone. In the latter case, the same steady state equilibrium is observed under both Cournot and Bertrand competition, as well as social planning.Journal of Economic LiteratureClassifications Numbers: C73, L13.