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Abstract
In this paper we provide a model of dynamic oligopoly in which firms take into account the financial constraints of all firms. The study of the equilibria of our dynamic game leads to the concept of Bankruptcy-Free outputs (BF) in which no firm can drive another firm to bankruptcy without becoming bankrupt itself. For a duopoly with sufficently patient firms all equilibria yield BF outputs. When there are more than two firms, outputs other than BF can be sustained as equilibria but the set of BF outputs is still useful in explaining the shape of the equilibrium set. Cournot one-shot equilibrium and joint profit maximization are more difficult to sustain as equilibria of our game than under the standard repeated games.
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