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Evolutionary Consumers Imply Monopolies Exit

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  • Patrick Hummel
  • R. Preston McAfee

Abstract

We address the question of how a monopolist should price when facing evolutionary consumers who gradually move in the direction of following their optimal strategy but may make temporary suboptimal choices. We show that under a broad generalization of the most commonly used model of evolution, the monopolist will set a path of prices such that all consumers eventually stop purchasing the monopolist's product.

Suggested Citation

  • Patrick Hummel & R. Preston McAfee, 2018. "Evolutionary Consumers Imply Monopolies Exit," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(4), pages 1733-1746, November.
    • Handle: RePEc:wly:iecrev:v:59:y:2018:i:4:p:1733-1746
    DOI: 10.1111/iere.12318
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