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From Walrasian oligopolies to natural monopolyan: An evolutionary model of market structure

Ania, Ana B. and Ferrer, Carlos Alós and Vega-Redondo, Fernando (1997) From Walrasian oligopolies to natural monopolyan: An evolutionary model of market structure. Working Paper. Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) Working Papers. Serie AD.

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Abstract

We study a market for a homogeneous good in which firms adjust theirproduction decisions on the basis of imitation, learning from own experience, and local experimentation.For any fixed set of firms (more than one), long run behavior settles on a symmetric marginal-cost pricingequlibrium. When market entry and exit are allowed, we find a sharp effect of technology onlongrun market structure. Specifically, we show that, under decreasing returns and some fixed cost,the market grows to full capacity at Walrasian equlibrium; on the other hand, if returns areincreasing, the unique long run outcome involves a profit-maximizing monopolist.

Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Imitation; evolution; mutation
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 08 Jan 2013 12:30
Last Modified: 08 Jan 2013 12:30
URI: http://repository.essex.ac.uk/id/eprint/4965

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