Cournot versus Walras in dynamic oligopolies with memory

Carlos Alós-Ferrer

Research output: Contribution to journalArticle

Abstract

This paper explores the impact of memory in Cournot oligopolies where firms learn through imitation of success as suggested in Alchian [J. Polit. Econ. 57 (1950) 211] and modeled in Vega-Redondo [Econometrica 65 (1997) 375]. As long as memory includes at least one period, the long-run outcome corresponds to any quantity between the Cournot one and the Walras one. The (evolutionary) stability of the walrasian outcome relies on interfirm comparisons of simultaneously observed profits (i.e., whether a firm earns more than others in a given period), whereas the stability of the Cournot-Nash equilibrium is derived from intertemporal comparisons of profits for each given firm (i.e., whether a deviation pays off for that firm).

Original languageEnglish (US)
Pages (from-to)193-217
Number of pages25
JournalInternational Journal of Industrial Organization
Volume22
Issue number2
DOIs
StatePublished - Feb 2004

Keywords

  • Cournot
  • Imitation
  • Memory
  • Mutation
  • Walras

ASJC Scopus subject areas

  • Industrial relations
  • Aerospace Engineering
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management
  • Industrial and Manufacturing Engineering

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