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Technology choice in an evolutionary oligopoly game

Author

Listed:
  • Fabio Lamantia

    (University of Calabria
    VŠB Technical University of Ostrava)

  • Anghel Negriu

    (University of Amsterdam)

  • Jan Tuinstra

    (University of Amsterdam)

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.

Suggested Citation

  • Fabio Lamantia & Anghel Negriu & Jan Tuinstra, 2018. "Technology choice in an evolutionary oligopoly game," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 41(2), pages 335-356, November.
    • Handle: RePEc:spr:decfin:v:41:y:2018:i:2:d:10.1007_s10203-018-0215-2
    DOI: 10.1007/s10203-018-0215-2
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    More about this item

    Keywords

    Oligopoly games; Evolutionary dynamics; Technology adoption;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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