From Walrasian oligopolies to natural monopolyan: An evolutionary model of market structure
AbstractWe study a market for a homogeneous good in which firms adjust theirproduction decisions on the basis of imitation, learning from own experience, and local experimentation.For any fixed set of firms (more than one), long run behavior settles on a symmetric marginal-cost pricingequlibrium. When market entry and exit are allowed, we find a sharp effect of technology onlongrun market structure. Specifically, we show that, under decreasing returns and some fixed cost,the market grows to full capacity at Walrasian equlibrium; on the other hand, if returns areincreasing, the unique long run outcome involves a profit-maximizing monopolist.
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Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 1997-24.
Length: 25 pages
Date of creation: Dec 1997
Date of revision:
Publication status: Published by Ivie
Imitation; evolution; mutation;
Other versions of this item:
- Carlos Alos-Ferrer & Ana B. Ania & Fernando Vega-Redondo, 1998. "From Walrasian Oligopolies to Natural Monopoly: an Evolutionary Model of Market Structure," CRIEFF Discussion Papers 9805, Centre for Research into Industry, Enterprise, Finance and the Firm.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- 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
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