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A note on evolutionary stability of Bertrand equilibrium

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Author Info
Burkhard Hehenkamp () (Department of Economics, University of Dortmund, D-44221 Dortmund, Germany)
Wolfgang Leininger () (Department of Economics, University of Dortmund, D-44221 Dortmund, Germany)

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Abstract

It is shown that the equilibrium notion of an evolutionary stable strategy (ESS) does have predictive power for standard models of Bertrand competition. This is in contrast to a recent claim by Qin and Stuart (1997). The claim is based on the observation that the solution concept ESS behaves discontinuously when finite (discrete) action games approach an infinite (continuous) action game in the limit. Furthermore, it is argued that from a model-theoretic point of view evolutionary stability in prices (i.e. in the Bertrand model) is quite different from evolutionary stability in quantities (i.e. in the Cournot model).

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Publisher Info
Article provided by Springer in its journal Journal of Evolutionary Economics.

Volume (Year): 9 (1999)
Issue (Month): 3 ()
Pages: 367-371
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Handle: RePEc:spr:joevec:v:9:y:1999:i:3:p:367-371

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Related research
Keywords: Bertrand ; Oligopoly ; Evolution ; Evolutionary stability;

Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

Cited by:
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  1. Kai Nagel & Martin Shubik & Maya Paczuski & Per Bak, 2000. "Spatial Competition and Price Formation," Working Papers 00-05-029, Santa Fe Institute.
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