IDEAS home Printed from https://ideas.repec.org/p/dpr/wpaper/0776.html
   My bibliography  Save this paper

Evolution of competitive equilibrium with endogenous product differentiation

Author

Listed:
  • Toshihiro Matsumura
  • Noriaki Matsushima
  • Tetsuo Yamamori

Abstract

Previous theoretical researches show that learning from good performers yields intense competition and results in the low profitability of firms. These researchers do not take into account differentiation strategies being referred as a useful strategic tool to mitigate competition. We introduce an evolutionary (learning) game into a duopoly model with product differentiation on the Hotelling line. We find that central agglomeration appears in the unique stochastically stable state in which the equilibrium price is equal to the marginal cost of firms. This implies that perfectly competitive equilibrium appears even when firms have an opportunity to differentiate themselves through product differentiation and to mitigate competition.

Suggested Citation

  • Toshihiro Matsumura & Noriaki Matsushima & Tetsuo Yamamori, 2010. "Evolution of competitive equilibrium with endogenous product differentiation," ISER Discussion Paper 0776, Institute of Social and Economic Research, Osaka University.
  • Handle: RePEc:dpr:wpaper:0776
    as

    Download full text from publisher

    File URL: http://www.iser.osaka-u.ac.jp/library/dp/2010/DP0776.pdf
    Download Restriction: no

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dpr:wpaper:0776. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fumiko Matsumoto). General contact details of provider: http://edirc.repec.org/data/isosujp.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.