Supply Function Auction for Linear Asymmetric Oligopoly: Equilibrium and Convergence

We study the supply function auction for an asymmetric oligopoly with uncertain linear demand function and linear marginal cost functions of producers. We examine existence of a supply function equilibrium (SFE) in the model and convergence of the best response dynamics to this equilibrium. We show that the dynamics converges to the SFE for a duopoly, but in general the SFE and the strong best response do not exist in the model.