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Axelrod Meets Cournot: Oligopoly and the Evolutionary Metaphor

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  • Dixon, Huw David
  • Wallis, Steven
  • Moss, Scott

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

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  • Dixon, Huw David & Wallis, Steven & Moss, Scott, 2002. "Axelrod Meets Cournot: Oligopoly and the Evolutionary Metaphor," Computational Economics, Springer;Society for Computational Economics, vol. 20(3), pages 139-156, December.
    • Handle: RePEc:kap:compec:v:20:y:2002:i:3:p:139-56
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    Cited by:

    1. Dixon, Huw D. & Sbriglia, Patrizia & Somma, Ernesto, 2006. "Learning to collude: An experiment in convergence and equilibrium selection in oligopoly," Research in Economics, Elsevier, vol. 60(3), pages 155-167, September.
    2. Eddy Cardinaels & Filip Roodhooft & Luk Warlop & Gustaaf Van Herck, 2008. "Competitive Pricing in Markets with Different Overhead Costs: Concealment or Leakage of Cost Information?," Journal of Accounting Research, Wiley Blackwell, vol. 46(4), pages 761-784, September.
    3. Altavilla, Carlo & Luini, Luigi & Sbriglia, Patrizia, 2006. "Social learning in market games," Journal of Economic Behavior & Organization, Elsevier, vol. 61(4), pages 632-652, December.
    4. Kopel, Michael & Lamantia, Fabio & Szidarovszky, Ferenc, 2014. "Evolutionary competition in a mixed market with socially concerned firms," Journal of Economic Dynamics and Control, Elsevier, vol. 48(C), pages 394-409.
    5. Johannes Wachs & J'anos Kert'esz, 2019. "A network approach to cartel detection in public auction markets," Papers 1906.08667, arXiv.org.
    6. Marta Posada & Adolfo López-Paredes, 2007. "How to Choose the Bidding Strategy in Continuous Double Auctions: Imitation Versus Take-The-Best Heuristics," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 11(1), pages 1-6.
    7. Domenico De Giovanni & Fabio Lamantia, 2016. "Control delegation, information and beliefs in evolutionary oligopolies," Journal of Evolutionary Economics, Springer, vol. 26(5), pages 1089-1116, December.

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