Essays on duopoly competition with asymmetric firms: Is profit maximization always an evolutionary stable strategy?

Douglas Silveira and Silvinha Vasconcelos

International Journal of Production Economics, 2020, vol. 225, issue C

Abstract: We propose both a well-mixed and spatially-structured evolutionary game to analyze the competitive behavior of retail firms in duopolistic markets. Firms from two different populations (high/low efficiency) compete and the available strategies are (i) Profit or (ii) Revenue maximization. Under bounded-rationality assumptions, firms can update their behavior through dynamic learning mechanisms. In addition to a replicator dynamics approach, we develop an Agent-based model to increase realism and to capture possible spatial effects on firms’ strategic behavior. A convergence between the methods is observed and, given specific conditions, Revenue maximization may corresponds to an Evolutionary Stable Strategy (ESS).

Keywords: Competition; Evolutionary game; Agent-based model (search for similar items in EconPapers)
JEL-codes: C15 C73 D21 L13 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:225:y:2020:i:c:s0925527319304293

DOI: 10.1016/j.ijpe.2019.107592

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