Technology choice in an evolutionary oligopoly game
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In this paper, we propose and analyze a two-stage oligopoly game in which firms first simultaneously choose production technologies and in the second stage simultaneously choose production quantities. After characterizing the Nash equilibrium of the game, we cast our static model in a dynamic setting exploring the stability properties of the market equilibrium in two different cases: (i) exogenously distributed technologies and Cournot adjustments and (ii) endogenously distributed technologies in an infinite population game with Cournot–Nash equilibrium outputs. The main aim of the paper is that of extending the results about Cournot oligopoly stability in an evolutionary setting of heterogeneous decreasing returns-to-scale technologies. We show how the interplay between production decisions and R&D decisions can generate endogenous market fluctuations leading to complex dynamic phenomena.
KeywordsOligopoly games Evolutionary dynamics Technology adoption
JEL ClassificationL13 O14 C61 C73
The authors would like to thank the anonymous Referees for their valuable comments, which highly helped to improve the manuscript. Fabio Lamantia and Jan Tuinstra gratefully acknowledge financial support from EU COST Action IS1104 “The EU in the new economic complex geography: models, tools and policy evaluation”. The research was supported by VŠB-TU Ostrava under the SGS Project SP2018/34.
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