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Imitation in Cournot oligopolies with multiple markets

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  • Jonas Hedlund

Abstract

This paper analyzes imitation dynamics in Cournot oligopolies when firms imitate both rivaling firms and firms in other markets. The resulting tension between relative and absolute performance leads to a unique prediction strictly between the Nash equilibrium and perfectly competitive outcomes, which is fully characterized by a simple formula. The outcome becomes less competitive as the number of markets increases, i.e., as firms receive more information about firms in other markets. A link with relative payoff maximization is provided. An extension of the benchmark model reveals that sophisticated firms imitating across asymmetric markets converge to a related but somewhat less competitive outcome. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Jonas Hedlund, 2015. "Imitation in Cournot oligopolies with multiple markets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 60(3), pages 567-587, November.
  • Handle: RePEc:spr:joecth:v:60:y:2015:i:3:p:567-587
    DOI: 10.1007/s00199-015-0878-7
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    Cited by:

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    2. Khan, Abhimanyu & Peeters, Ronald, 2017. "Imitation and price competition in a differentiated market," Journal of Economic Dynamics and Control, Elsevier, vol. 82(C), pages 177-194.
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    4. Abhimanyu Khan, 2021. "Evolution of conventions in games between behavioural rules," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 9(2), pages 209-224, October.
    5. Moghadam, Hamed Markazi, 2021. "A nonparametric approach to evolutionary oligopoly games: An application to the crude oil industry," Economic Modelling, Elsevier, vol. 101(C).

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    More about this item

    Keywords

    Evolution; Imitation; Oligopoly; Stochastic stability; C72; C73; D43;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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