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 pri-vate information about their costs is, in general, very cumbersome. Most authors consider therefore linear demands and constant marginal costs. However, within this framework, the nonnegativity constraint on prices (and quantities) has been ignored or not properly dealt with and the correct calculation of all Bayesian Nash equilibria 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, since there is a kink at zero price: the general “linear