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Imitators and optimizers in Cournot oligopoly

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  • Schipper, Burkhard C.

Abstract

We analyze a symmetric n-firm Cournot oligopoly with a heterogeneous population of optimizers and imitators. Imitators mimic the output decision of the most successful firms of the previous round à la Vega-Redondo, F., [1997. The evolution of Walrasian behavior. Econometrica 65, 375-384]. Optimizers play a myopic best response to the opponents' previous output. Firms make mistakes and deviate from their decision rules with a small probability. Applying stochastic stability analysis, we find that the long run distribution converges to a recurrent set of states in which imitators are better off than are optimizers.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 33 (2009)
Issue (Month): 12 (December)
Pages: 1981-1990

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Handle: RePEc:eee:dyncon:v:33:y:2009:i:12:p:1981-1990

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Web page: http://www.elsevier.com/locate/jedc

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Keywords: Profit maximization hypothesis Bounded rationality Learning Stackelberg Quasisubmodularity;

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