Axelrod Meets Cournot: Oligopoly and the Evolutionary Metaphor

Huw Dixon, Steven Wallis and Scott Moss

Computational Economics, 2002, vol. 20, issue 3, 139-56

Abstract: This paper explores the implication of evolutionary models (replicator dynamics) in a simple Cournot duopoly model. A firm type is a linear decision rule in which the firm's output depends on the other firm's previous output. First we run an Axelrod Tournament between firm types. The champion firm is a near profit-maximizer. Secondly, we allow social evolution to occur using replicator dynamics. Here we find that there are very strong forces leading towards a collusive or near collusive outcome, so long as there is not too much "noise" in the dynamics. Copyright 2002 by Kluwer Academic Publishers

Date: 2002
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