Oligopoly Game Stabilisation Through Multilayer Congestion Dynamics

TL;DR

This paper models the stabilization of oligopoly markets using multilayer congestion dynamics, integrating game theory and network analysis to understand equilibrium stability under complex transport network interactions.

Contribution

It introduces a coupled multilayer network model for oligopoly markets, revealing how inter-layer feedback influences equilibrium stability and uniqueness.

Findings

Uncoupled layers have unique, stable equilibria.

Linked layers can have non-unique, stable equilibria.

Players benefit from non-simultaneous responses to market changes.

Abstract

International trade and logistics are subject to factors including geopolitical instability, climate change, and black swan events such as the unforeseen closure of the Suez Canal. The problem of predicting local price change under modification of an underlying transport network or change in supply characteristics unites elements of game theory, network theory and transport. The Cournot Oligopoly models economic actors as rational players attempting to maximise profit by optimising supply quantities with analytical results now consolidated about equilibrium characteristics where transport conditions are fixed. Similarly, where supply and demand are fixed, the routing of goods in a transport network can be analytically solved through a traffic assignment problem. Hence we can solve the coupled Cournot-congestion problem by means of a 2-layer network. Where the layers are linked, inter-layer feedback wherein players attempt to maximise their utility occurs. In this respect we find players benefit from taking advantage of non-simultaneous responses to the market rather than moving to a new equilibrium. We draw conclusions about the nature of equilibria, finding that the concave utility curve property results in unique and stable equilibrium for each uncoupled layer, while linked layers have a non-unique stable equilibria for which general solutions are stated.