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The evolution of Walrasian behavior. (English) Zbl 0874.90049
Consider an evolutionary context where a given set of quantity-setting oligopolists tend to mimic successful behavior, occasionally experimenting with some small probability. In this context, it is shown that the unique long-run outcome of the process has all firms playing Walrasian, i.e., choosing an output that maximizes profits when taking the market-clearing price as given. In further research it has been shown that an analogous conclusion obtains in an increasing returns scenario (where the marginal-cost pricing equilibrium materializes) or when the number of firms in the market evolves endogeneously in response to profits and losses (see “The evolution of market structure”, Working Paper A Discussion, Universidad de Alicante (1997), which is a joint work of the author, C. Alós and A. B. Ania).

MSC:
91B62 Economic growth models
91B26 Auctions, bargaining, bidding and selling, and other market models
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