Effects of Size, Composition, and Evolutionary Pressure in Heterogeneous Cournot Oligopolies with Best Response Decisional Mechanisms
We study heterogeneous Cournot oligopolies of variable sizes and compositions, in which the firms have different degrees of rationality, being either rational firms with perfect foresight or naive best response firms with static expectations. Each oligopoly can be described using its size and com...
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| Format: | Article |
| Language: | English |
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Wiley
2015-01-01
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| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2015/273026 |
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| author | Fausto Cavalli Ahmad Naimzada Marina Pireddu |
| author_facet | Fausto Cavalli Ahmad Naimzada Marina Pireddu |
| author_sort | Fausto Cavalli |
| collection | DOAJ |
| description | We study heterogeneous Cournot oligopolies of variable sizes and compositions, in which the firms have different degrees of rationality, being either rational firms with perfect foresight or naive best response firms with static expectations. Each oligopoly can be described using its size and composition, that is, the fraction of firms that are rational. We take into account two frameworks, one in which the decisional rules are exogenously assigned and the other in which the firms may change their heuristics. We consider a switching mechanism based on a logit rule, where the switching propensity is regulated by a parameter which represents the evolutionary pressure. In the fixed fractions setting, we prove that, in general, the composition has a stabilizing effect, while increasing the oligopoly size leads to instability. However, we show that, for particular parameters settings, stability is not affected by the composition or the firms number. Similarly, in the evolutionary fractions setting, we analytically prove that when marginal costs are identical, increasing the evolutionary pressure has a destabilizing effect. Nevertheless, focusing on particular examples with different marginal costs we are able to show that evolutionary pressure may also have a stabilizing or a neutral role. |
| format | Article |
| id | doaj-art-2d46588e035646429c0a4cc817bf0fc4 |
| institution | Kabale University |
| issn | 1026-0226 1607-887X |
| language | English |
| publishDate | 2015-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-2d46588e035646429c0a4cc817bf0fc42025-02-03T07:24:20ZengWileyDiscrete Dynamics in Nature and Society1026-02261607-887X2015-01-01201510.1155/2015/273026273026Effects of Size, Composition, and Evolutionary Pressure in Heterogeneous Cournot Oligopolies with Best Response Decisional MechanismsFausto Cavalli0Ahmad Naimzada1Marina Pireddu2Department of Economics, Management and Statistics, University of Milano-Bicocca, 20126 Milano, ItalyDepartment of Economics, Management and Statistics, University of Milano-Bicocca, 20126 Milano, ItalyDepartment of Mathematics and Applications, University of Milano-Bicocca, 20125 Milano, ItalyWe study heterogeneous Cournot oligopolies of variable sizes and compositions, in which the firms have different degrees of rationality, being either rational firms with perfect foresight or naive best response firms with static expectations. Each oligopoly can be described using its size and composition, that is, the fraction of firms that are rational. We take into account two frameworks, one in which the decisional rules are exogenously assigned and the other in which the firms may change their heuristics. We consider a switching mechanism based on a logit rule, where the switching propensity is regulated by a parameter which represents the evolutionary pressure. In the fixed fractions setting, we prove that, in general, the composition has a stabilizing effect, while increasing the oligopoly size leads to instability. However, we show that, for particular parameters settings, stability is not affected by the composition or the firms number. Similarly, in the evolutionary fractions setting, we analytically prove that when marginal costs are identical, increasing the evolutionary pressure has a destabilizing effect. Nevertheless, focusing on particular examples with different marginal costs we are able to show that evolutionary pressure may also have a stabilizing or a neutral role.http://dx.doi.org/10.1155/2015/273026 |
| spellingShingle | Fausto Cavalli Ahmad Naimzada Marina Pireddu Effects of Size, Composition, and Evolutionary Pressure in Heterogeneous Cournot Oligopolies with Best Response Decisional Mechanisms Discrete Dynamics in Nature and Society |
| title | Effects of Size, Composition, and Evolutionary Pressure in Heterogeneous Cournot Oligopolies with Best Response Decisional Mechanisms |
| title_full | Effects of Size, Composition, and Evolutionary Pressure in Heterogeneous Cournot Oligopolies with Best Response Decisional Mechanisms |
| title_fullStr | Effects of Size, Composition, and Evolutionary Pressure in Heterogeneous Cournot Oligopolies with Best Response Decisional Mechanisms |
| title_full_unstemmed | Effects of Size, Composition, and Evolutionary Pressure in Heterogeneous Cournot Oligopolies with Best Response Decisional Mechanisms |
| title_short | Effects of Size, Composition, and Evolutionary Pressure in Heterogeneous Cournot Oligopolies with Best Response Decisional Mechanisms |
| title_sort | effects of size composition and evolutionary pressure in heterogeneous cournot oligopolies with best response decisional mechanisms |
| url | http://dx.doi.org/10.1155/2015/273026 |
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