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Technology choice in an evolutionary oligopoly game

Fabio Lamantia (), Anghel Negriu () and Jan Tuinstra ()
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Fabio Lamantia: University of Calabria
Anghel Negriu: University of Amsterdam

Decisions in Economics and Finance, 2018, vol. 41, issue 2, 335-356

Abstract: Abstract In this paper, we propose and analyze a two-stage oligopoly game in which firms first simultaneously choose production technologies and in the second stage simultaneously choose production quantities. After characterizing the Nash equilibrium of the game, we cast our static model in a dynamic setting exploring the stability properties of the market equilibrium in two different cases: (i) exogenously distributed technologies and Cournot adjustments and (ii) endogenously distributed technologies in an infinite population game with Cournot–Nash equilibrium outputs. The main aim of the paper is that of extending the results about Cournot oligopoly stability in an evolutionary setting of heterogeneous decreasing returns-to-scale technologies. We show how the interplay between production decisions and R&D decisions can generate endogenous market fluctuations leading to complex dynamic phenomena.

Keywords: Oligopoly games; Evolutionary dynamics; Technology adoption (search for similar items in EconPapers)
JEL-codes: L13 O14 C61 C73 (search for similar items in EconPapers)
Date: 2018
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