Free entry and stability in a cournot model

In a Cournot model for a single homogeneous good, we study simultaneously two stability properties of a Cournot equilibrium: the stability of a continuous quantity adjustment process with a fixed number of firms and the stability relative to entry. Under usual assumptions, we show that these two properties are consistent—i.e., there exists an equilibrium that is stable in both senses—and determine quite sharply the number of active firms.