Bayesian Nash Equilibrium in ”Linear” Cournot Models withPrivateInformationaboutCost. Ufaeandiaeworkingpapers, Unitat de Fonaments de l’Anlisi Econmica (UAB) and Institut d’Anlisi Econmica (CSIC

Calculating explicit closed form solutions of Cournot models where firms have private information about their costs is, in general, very cum-bersome. Most authors consider therefore linear demands and constant marginal costs. However, even within this framework, some details have been overlooked and the correct calculation of all Bayesian Nash equi-libria is more complicated than expected. Moreover, multiple symmetric and interior Bayesian equilibria may exist for an open set of parameters. The reason for this is that linear demand is not really linear. The general “linear ” inverse demand function is P (Q) = max{a − bQ, 0} rather than P (Q) = a − bQ. In particular, price must be nonnegative