Evolutionary Competition between Adjustment Processes in Cournot Oligopoly: Instability and Complex Dynamics

Cars Hommes, Marius I. Ochea and Jan Tuinstra

No 2016-03, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: We introduce evolutionary competition between adjustment processes in the Cournot oligopoly model. Our main focus is on rational play versus a general short-memory adaptive adjustment process. We nd that, although rational play has a stabilizing inuence, a su¢ cient increase in the number of rms in the market tends to make the Cournot-Nash equilibrium unstable. Moreover, the interaction between adjustment processes naturally leads to the emergence of complicated endogenous uctuations as the number of rms increases, even when demand and costs are linear.

Keywords: Stability of Cournot-Nash equilibrium; n-player Cournot games; Evolutionary competition; Endogenous uctuations (search for similar items in EconPapers)
JEL-codes: C72 C73 D43 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-com and nep-gth
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Citations: View citations in EconPapers (3)

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Journal Article: Evolutionary Competition Between Adjustment Processes in Cournot Oligopoly: Instability and Complex Dynamics (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2016-03

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