Axelrod Meets Cournot: Oligopoly and the Evolutionary Metaphor

  • Authors:

  • Huw David Dixon;Steven Wallis;Scott Moss

  • Affiliations:

  • Economics Department, York University, York Y01 5DD U.K./ E-mail: hdd1@york.ac.uk;Centre for Policy Modelling, Faculty of Management and Business, Manchester Metropolitan University, Aytoun Building, Aytoun Street, Manchester M1 3GH, U.K./ E-mail: s.wallis@mmu.ac.uks.moss@mmu.ac.uk

  • Venue:
  • Computational Economics
  • Year:
  • 2002

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Abstract

This paper explores the implication of evolutionary models (replicatordynamics) in a simple Cournot duopoly model. A firm type is a linear decisionrule in which the firm's output depends on the other firm's previous output.First we run an Axelrod Tournament between firm types. The champion firm isa near profit-maximizer. Secondly, we allow social evolution to occur usingreplicator dynamics. Here we find that there are very strong forces leadingtowards a collusive or near collusive outcome, so long as there is not toomuch `noise' in the dynamics.