Cournot Competition, Organization and Learning

Ray Barrell and Francesco Saraceno ()
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Ray Barrell: NIESR - Research Centre of the National Institute of Economic and Social Research - National Institute of Economic and Social Research
Francesco Saraceno: OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po

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Abstract: We model firms' output decisions in a repeated duopoly frameworkfocusing on three interrelated issues: (1) the role of learningin the adjustment process toward equilibrium, (2) the role of organizationalstructure in the firm's decision making, and (3) the role ofchanging environmental conditions on learning and output decisions.We characterize the firm as a type of artificial neural network, whichmust estimate its optimal output decision based on signals it receivesfrom the economic environment (which influences the demand function).Via simulation analysis we show: (1) how organizations learn toestimate the optimal output over time as a function of the environmentaldynamics; (2) which networks are optimal for each environmentalcomplexity, and (3) the equilibrium industry structure.

Keywords: Cournot Competition; Neural Networks; Firm learning (search for similar items in EconPapers)
Date: 2005-01
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Citations: View citations in EconPapers (1)

Published in Journal of Economic Dynamics and Control, 2005, 29 (1-2), pp.277 - 295. ⟨10.1016/j.jedc.2003.07.003⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:hal-03597732

DOI: 10.1016/j.jedc.2003.07.003

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