Long run equilibria in an asymmetric oligopoly |
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Authors: | Yasuhito Tanaka |
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Institution: | (1) Faculty of Law, Chuo University, 742-1, Higashinakano, Hachioji, Tokyo, 192-03, JAPAN (e-mail: yasuhito@tamacc.chuo-u.ac.jp) , JP |
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Abstract: | Summary. 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.
Received: September 19, 1997; revised: June 18, 1998 |
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Keywords: | and Phrases: Asymmetric oligopoly Finite population evolutionarily stable strategy Long run equilibrium |
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