EconPapers    
Economics at your fingertips  
 

- AN EVOLUTIONARY MODEL OF BERTRAND OLIGOPOLY

Ana Ania (), Carlos Alós-Ferrer () and Klaus Schenk-Hoppé

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: We analyze the long-run outcome of markets in which boundedly rational firms with a decreasingreturns to scale technology compete in prices. The behavior of these firms is based on limitation ofsuccess and experimentation. In this framework, we introduce a new approach to model boundedlyrational behavior, based on the idea of behavioral principles, i.e. formal descriptions. Even with thesimplest ones, the result is that the prices announced are a strict refinement of the set of Nashequilibria. With more sophisticated behavioral principles, the long-run outcome corresponds to theconcept of central prices (wich are also Nash equilibria) introduced here. This is a robust andclear-cut prediction wich, under quadratic costs and arbitrary demand, essentially coincides with theWalrasian equilibrium.

Keywords: evolution; mutation; imitation (search for similar items in EconPapers)
Pages: 28 pages
Date: 1998-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed

Published by Ivie

Downloads: (external link)
http://www.ivie.es/downloads/docs/wpasad/wpasad-1998-14.pdf Fisrt version / Primera version, 1998 (application/pdf)

Related works:
Journal Article: An Evolutionary Model of Bertrand Oligopoly (2000) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:1998-14

Access Statistics for this paper

More papers in Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) Contact information at EDIRC.
Bibliographic data for series maintained by Departamento de Edición ().

 
Page updated 2021-06-21
Handle: RePEc:ivi:wpasad:1998-14