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Long run equilibria in an asymmetric oligopoly

Author

Listed:
  • Yasuhito Tanaka

    (Faculty of Law, Chuo University, 742-1, Higashinakano, Hachioji, Tokyo, 192-03, JAPAN)

Abstract

Consider an oligopolistic industry composed of two groups (or populations) of firms, the low cost firms and the high cost firms. The firms produce a homogeneous good. I study the finite population evolutionarily stable strategy defined by Schaffer (1988), and the long run equilibrium in the stochastic evolutionary dynamics based on imitation and experimentation of strategies by firms in each group. I will show the following results. 1) The finite population evolutionarily stable strategy (ESS) output is equal to the competitive (or Walrasian) output in each group of the firms. 2) Under the assumption that the marginal cost is increasing, the ESS state is the long run equilibrium in the stochastic evolutionary dynamics in the limit as the output grid step, which will be defined in the paper, approaches to zero.

Suggested Citation

  • Yasuhito Tanaka, 1999. "Long run equilibria in an asymmetric oligopoly," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 14(3), pages 705-715.
    • Handle: RePEc:spr:joecth:v:14:y:1999:i:3:p:705-715
    Note: Received: September 19, 1997; revised: June 18, 1998
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    More about this item

    Keywords

    Asymmetric oligopoly; Finite population evolutionarily stable strategy; Long run equilibrium.;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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