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Keeping up with the Joneses: competition and the evolution of collusion

Dixon, Huw David 2000. Keeping up with the Joneses: competition and the evolution of collusion. Journal of Economic Behavior & Organization 43 (2) , pp. 223-238. 10.1016/S0167-2681(00)00117-7

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An economy consists of many markets, each of which is a duopoly. Firms must earn normal-profits in the long-run if they have to survive. Normal-profits are interpreted as the long-run limit of average profits in the whole economy. We adopt an aspiration based model of firm behaviour, linking it to the economy with the requirement that in the long-run, the profit aspiration must be at least as great as normal-profits. We assume that the joint-profits can be maximized with symmetric payoffs, and with very few other assumptions are able to show that the (almost) global attractor is the cooperative outcome.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HB Economic Theory
H Social Sciences > HT Communities. Classes. Races
Uncontrolled Keywords: Aspirations; Learning; Evolution; Average-payoff
Publisher: Elsevier
ISSN: 0167-2681
Last Modified: 04 Jun 2017 04:24

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