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Evolution in a Walrasian setting

Author

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  • Accinelli, Elvio
  • Covarrubias, Enrique

Abstract

This paper models the dynamic of a sector where firms imitate the technology of leading firms. While it would seem natural to expect that managers will aim at producing with the technology that produces the highest benefits, if many other managers also follow this behavior, the market structure might be modified so much that the advantage associated with a high-profit technology might be erased or even reverse. By modeling this imitation process with replicating dynamics, we find that even if the parameters of the economy are continuous through time and the economy follows a path of competitive equilibria, endogenous discrete jumps in technological choices occur.

Suggested Citation

  • Accinelli, Elvio & Covarrubias, Enrique, 2015. "Evolution in a Walrasian setting," MPRA Paper 64736, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:64736
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    File URL: https://mpra.ub.uni-muenchen.de/64736/1/MPRA_paper_64736.pdf
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    References listed on IDEAS

    as
    1. Duersch, Peter & Oechssler, Jörg & Schipper, Burkhard C., 2012. "Unbeatable imitation," Games and Economic Behavior, Elsevier, vol. 76(1), pages 88-96.
    2. Kandori, Michihiro & Serrano, Roberto & Volij, Oscar, 2008. "Decentralized trade, random utility and the evolution of social welfare," Journal of Economic Theory, Elsevier, vol. 140(1), pages 328-338, May.
    3. Huang, Weihong, 2003. "A naive but optimal route to Walrasian behavior in oligopolies," Journal of Economic Behavior & Organization, Elsevier, vol. 52(4), pages 553-571, December.
    4. Huang, Weihong, 2011. "Price-taking behavior versus continuous dynamic optimizing," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1-2), pages 37-50, April.
    5. Elvio ACCINELLI & Puchet MARTIN, "undated". "A Classification Of Infinity Dimensional Walrasian Economies," EcoMod2005 280900000, EcoMod.
    6. Apesteguia, Jose & Huck, Steffen & Oechssler, Jörg & Weidenholzer, Simon, 2010. "Imitation and the evolution of Walrasian behavior: Theoretically fragile but behaviorally robust," Journal of Economic Theory, Elsevier, vol. 145(5), pages 1603-1617, September.
    7. Ania, Ana B., 2008. "Evolutionary stability and Nash equilibrium in finite populations, with an application to price competition," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 472-488, March.
    8. Harrington, Joseph Jr. & Chang, Myong-Hun, 2005. "Co-evolution of firms and consumers and the implications for market dominance," Journal of Economic Dynamics and Control, Elsevier, vol. 29(1-2), pages 245-276, January.
    9. Acemoglu, Daron & Jensen, Martin Kaae, 2013. "Aggregate comparative statics," Games and Economic Behavior, Elsevier, vol. 81(C), pages 27-49.
    10. Ben-Shoham, Assaf & Serrano, Roberto & Volij, Oscar, 2004. "The evolution of exchange," Journal of Economic Theory, Elsevier, vol. 114(2), pages 310-328, February.
    11. Jesse Perla & Christopher Tonetti, 2014. "Equilibrium Imitation and Growth," Journal of Political Economy, University of Chicago Press, vol. 122(1), pages 52-76.
    12. Schlag, Karl H., 1998. "Why Imitate, and If So, How?, : A Boundedly Rational Approach to Multi-armed Bandits," Journal of Economic Theory, Elsevier, vol. 78(1), pages 130-156, January.
    13. Yves Balasko, 2009. "The Equilibrium Manifold: Postmodern Developments in the Theory of General Economic Equilibrium," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262026546, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    General equilibrium; evolutionary games;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • E03 - Macroeconomics and Monetary Economics - - General - - - Behavioral Macroeconomics
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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