Stability of Cournot equilibria under discrete best-reply dynamics with non-negative output constraints

This paper explores the stability of Cournot equilibria under discrete best-reply dynamics with non-negative output constraints. When firms produce complement goods, Cournot equilibria are the unique and globally stable solutions of the dynamics under some stability conditions, and all firms will survive in the long run regardless of their efficiency levels. By contrast, if firms produce substitute goods, Cournot equilibria are neither the limit of the dynamics nor stable unless all firms are efficient enough.