Kochanski_Moving Economic Models from the Chalk Board to the Computer: A Computer Based Assignment Based on a Dynamic Cournot Model

Moving Economic Models from the Chalk Board to the Computer: A Computer Based Assignment Based on a Dynamic Cournot Model Tim Kochanski Portland State University, USA AAbbssttrraacctt This paper presents an iterative model, programmed in Mathematica, which... More

Moving Economic Models from the Chalk Board to the Computer: A Computer Based Assignment Based on a Dynamic Cournot Model Tim Kochanski Portland State University, USA AAbbssttrraacctt This paper presents an iterative model, programmed in Mathematica, which solves time paths for repeated Cournot games allowing us to see how output, price, profits, and market share in the two-firm case change over time when one firm experiences per turn marginal cost reductions. By adjusting the marginal cost reduction rate for one firm and iterating, students can explore the various solutions and gain a better understanding of how the variables in the model diverge over time and the properties of that divergence. More generally, students gain experience designing models and programming in Mathematica and furthermore develop a deeper understanding of iteration in simulations. IInnttrroodduuccttiioonn The use of Mathematica in economics has been widely discussed in the literature, both in the context of mo Less