Template-type: ReDif-Paper 1.0
Author-Name: Khan Abhimanyu 
Author-Name: Peeters Ronald 
Author-workplace-name: METEOR
Title: Evolution of behavior when duopolists choose prices and quantities
Abstract: We study duopolistic competition in a differentiated market with firms setting prices and quantities, without explicitly imposing market clearing. Unlike the commonly adopted assumption of profit maximizing firms, we assume firm behavior to be shaped by a Darwinian dynamic: the less fitter firm imitates the fitter firm and occasionally firms may experiment with a random price and/or quantity. Our two main findings are that: (i) a market clearing outcome always belongs to the set of feasible long run outcomes, but may co-exist with non-market clearing outcomes with as well excess supply as excess demand being possible; and (ii) there exist parameter configurations for which the only feasible outcomes imply prices above monopoly level.
Keywords: microeconomics ; 
Series: Research Memoranda
Creation-Date: 2011
Number: 027
File-URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:43baa9c3-c947-4214-997b-695f8fa390e4/datastreams/ASSET1/content
File-Format: application/pdf
File-Size: 402826
Handle: RePEc:unm:umamet:2011027