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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.

Suggested Citation

  • Schipper, Burkhard C., 2009. "Imitators and optimizers in Cournot oligopoly," Journal of Economic Dynamics and Control, Elsevier, vol. 33(12), pages 1981-1990, December.
  • Handle: RePEc:eee:dyncon:v:33:y:2009:i:12:p:1981-1990
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    Cited by:

    1. Fosco, Constanza & Mengel, Friederike, 2011. "Cooperation through imitation and exclusion in networks," Journal of Economic Dynamics and Control, Elsevier, vol. 35(5), pages 641-658, May.
    2. Matros, Alexander, 2012. "Altruistic versus egoistic behavior in a Public Good game," Journal of Economic Dynamics and Control, Elsevier, vol. 36(4), pages 642-656.
    3. repec:ebl:ecbull:v:12:y:2006:i:14:p:1-7 is not listed on IDEAS
    4. repec:tcd:wpaper:tep6 is not listed on IDEAS
    5. Mark Armstrong & Steffen Huck, 2011. "Behavioral Economics as Applied to Firms: A Primer," Antitrust Chronicle, Competition Policy International, vol. 1.
    6. J. Thijssen, 2005. "Nearly-complete Decomposability and Stochastic Stability with an Application to Cournot Oligopoly," Trinity Economics Papers tep6, Trinity College Dublin, Department of Economics.
    7. Burkhard Schipper, 2015. "Strategic teaching and learning in games," Working Papers 151, University of California, Davis, Department of Economics.
    8. Tsakas, Nikolas, 2015. "Beatable imitation in symmetric games with perturbed payoffs," Mathematical Social Sciences, Elsevier, vol. 74(C), pages 34-40.
    9. Peter Duersch & Jörg Oechssler & Burkhard Schipper, 2014. "When is tit-for-tat unbeatable?," International Journal of Game Theory, Springer;Game Theory Society, vol. 43(1), pages 25-36, February.
    10. Khan, Abhimanyu & Peeters, Ronald, 2015. "Imitation by price and quantity setting firms in a differentiated market," Journal of Economic Dynamics and Control, Elsevier, vol. 53(C), pages 28-36.
    11. Alessandra Chirco & Caterina Colombo & Marcella Scrimitore, 2013. "Quantity competition, endogenous motives and behavioral heterogeneity," Theory and Decision, Springer, vol. 74(1), pages 55-74, January.
    12. repec:kap:jincot:v:17:y:2017:i:3:d:10.1007_s10842-016-0238-8 is not listed on IDEAS
    13. Peter Duersch & Joerg Oechssler & Burkhard Schipper, 2011. "Once Beaten, Never Again: Imitation in Two-Player Potential Games," Working Papers 1112, University of California, Davis, Department of Economics.
    14. David M. Newbery & Thomas P. Greve, 2015. "The robustness of industrial commodity oligopoly pricing strategies," Cambridge Working Papers in Economics 1540, Faculty of Economics, University of Cambridge.
    15. repec:eee:quaeco:v:67:y:2018:i:c:p:1-7 is not listed on IDEAS
    16. Burkhard C. Schipper & Jorg Oechssler & Albert Kolb, 2005. "Rage Against the Machines: How Subjects Learn to Play Against Computers," Working Papers 516, University of California, Davis, Department of Economics.
    17. Duersch, Peter & Oechssler, Jörg & Schipper, Burkhard C., 2012. "Unbeatable imitation," Games and Economic Behavior, Elsevier, vol. 76(1), pages 88-96.
    18. May, Daniel E., 2015. "Behavioural Drivers of Business Competitiveness in Agriculture," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 16(2), June.
    19. Schipper, Burkhard C., 2005. "The Evolutionary Stability of Optimism, Pessimism and Complete Ignorance," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 68, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    20. Jacco Thijssen, 2003. "Evolution of Conjectures in Cournot Oligopoly," Trinity Economics Papers 200316, Trinity College Dublin, Department of Economics.
    21. Burkhard C. Schipper & Jorg Oechssler & Albert Kolb, 2005. "Rage Against the Machines: How Subjects Learn to Play Against Computers," Working Papers 516, University of California, Davis, Department of Economics.
    22. David M. Newbery & Thomas Greve, 2013. "The Strategic Robustness of Mark-up Equilibria," Cambridge Working Papers in Economics 1341, Faculty of Economics, University of Cambridge.

    More about this item

    Keywords

    Profit maximization hypothesis Bounded rationality Learning Stackelberg Quasisubmodularity;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - 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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