Simulation of cooperation for price competition in oligopolies

Authors:
Tzai-Der Wang;Colin Fyfe
Affiliations:
Department of Industrial Engineering and Management, Cheng Shiu University, Kaohsiung County, Taiwan, ROC;Applied Computational Intelligence Research Unit, The University of Paisley, Scotland, UK
Venue:
SEAL'06 Proceedings of the 6th international conference on Simulated Evolution And Learning
Year:
2006

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Adaptation in natural and artificial systems

Adaptation in natural and artificial systems
Simulating the ecology of oligopolistic competition with genetic algorithms

Knowledge and Information Systems

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Abstract

In this research, an agent-based simulation model for price competition in oligopolies is built and Genetic Algorithm is used to evolve the oligopolies' decisions of price while facing the competitors in markets. The experimental results show two factors influencing the price competition situations and ‘given' factor that competitor can not control leads strong influence on their decision of price. Total cooperation (Collusion to high prices) seems not to be achieved under the different parameter settings while many competitors involving in the market and a limitation of cooperation forms in which no effect forces the achievement of total cooperation.