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Imitation in Cournot oligopolies with multiple markets

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  • Jonas Hedlund

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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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    References listed on IDEAS

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    Cited by:

    1. repec:bpj:jossai:v:5:y:2017:i:6:p:511-523:n:2 is not listed on IDEAS
    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.
    3. repec:spr:joecth:v:65:y:2018:i:4:d:10.1007_s00199-017-1044-1 is not listed on IDEAS

    More about this item

    Keywords

    Evolution; Imitation; Oligopoly; Stochastic stability; C72; C73; D43;

    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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