A model-to-model analysis of Bertrand competition
Vilà, Xavier (Vilà Carnicero)

Date: 2008
Abstract: This paper studies a version of the classical Bertrand model in which consumers exhibit some strategic behavior when deciding from what seller they will buy. We use two related but different tools. Both consider a probabilistic learning (or evolutionary) mechanism, and in the two of them consumers' behavior influences the competition between the sellers. The results obtained show that, in general, developing some sort of loyalty is a good strategy for the buyers as it works in their best interest. First, we consider a learning procedure described by a deterministic dynamic system and, using strong simplifying assumptions, we can produce a description of the behavior of the process. Second, we use finite automata to represent the strategies played by the agents and an adaptive process based on genetic algorithms to simulate the stochastic process of learning. By doing so we can relax some of the strong assumptions used in the first approach and still obtain the same basic results. It is suggested that the limitations of the first approach (analytical) provide a good motivation for the second approach (Agent-Based). Indeed, although both approaches address the same problem, the use of Agent-Based computational techniques allows us to relax hypothesis and overcome the limitations of the analytical approach while obtaining the same basic results.
Note: Financial support from the Spanish Ministry of Education and Science through grant SEJ2005-01481/ECON and FEDER, SGR2005-0712 of the Direcció General de Recerca (Generalitat of Catalonia), CONSOLIDER-INGENIO 2010 (CSD2006-00016), and CREA (Barcelona Economics) are gratefully acknowledged.
Note: Número d'acord de subvenció MEC/SEJ2005-01481/ECON
Note: Número d'acord de subvenció AGAUR/SGR2005-0712
Note: Número d'acord de subvenció MINECO/CSD2006-00016
Rights: Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la distribució, la comunicació pública de l'obra i la creació d'obres derivades, fins i tot amb finalitats comercials, sempre i quan es reconegui l'autoria de l'obra original. Creative Commons
Language: Anglès.
Document: article ; recerca ; publishedVersion
Subject: Jocs, Teoria de ; Economia matemàtica ; Economia ; Processament de dades ; Agent-based computational economics ; Model-to-model analysis ; Evolutionary game theory ; Imperfect competition
Published in: Journal of artificial societies and social simulation, Vol. 11 Núm. 2 (2008) , p. 185-205, ISSN 1460-7425

Adreça alternativa: http://jasss.soc.surrey.ac.uk/11/2/11.html

19 p, 517.6 KB

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Articles > Research articles
Articles > Published articles

 Record created 2015-11-03, last modified 2019-10-07

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