Nonlinear Sciences – Adaptation and Self-Organizing Systems
Scientific paper
2006-04-25
Physica A, 370, 81-85 (2006)
Nonlinear Sciences
Adaptation and Self-Organizing Systems
Accepted for Physica A
Scientific paper
10.1016/j.physa.2006.04.032
Neoclassical economics has two theories of competition between profit-maximizing firms (Marshallian and Cournot-Nash) that start from different premises about the degree of strategic interaction between firms, yet reach the same result, that market price falls as the number of firms in an industry increases. The Marshallian argument is strictly false. We integrate the different premises, and establish that the optimal level of strategic interaction between competing firms is zero. Simulations support our analysis and reveal intriguing emergent behaviors.
Keen Steve
Standish Russell K.
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