A Note on Evolutionary Stability of Bertrand Equilibrium

Posted: 27 Sep 1999

See all articles by Burkhard Hehenkamp

Burkhard Hehenkamp

University of Paderborn

Wolfgang Leininger

University of Dortmund - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Abstract

It is shown that the equilibrium notion of an evolutionary stable strategy (ESS) does have predictive power for standard models of Bertrand competition. This is in contrast to a recent claim by Qin and Stuart (1997). The claim is based on the observation that the solution concept ESS behaves discontinuously when finite (discrete) action games approach an infinite (continuous) action game in the limit. Furthermore, it is argued that from a model-theoretic point of view evolutionary stability in prices (i.e. in the Bertrand model) is quite different from evolutionary stability in quantities (i.e. in the Cournot model).

JEL Classification: D43, L13, C72

Suggested Citation

Hehenkamp, Burkhard and Leininger, Wolfgang, A Note on Evolutionary Stability of Bertrand Equilibrium. Available at SSRN: https://ssrn.com/abstract=179560

Burkhard Hehenkamp (Contact Author)

University of Paderborn ( email )

Warburger Str. 100
D-33098 Paderborn
United States

HOME PAGE: http://wiwi.uni-paderborn.de/dep4/lehrstuhl-prof-dr-hehenkamp/

Wolfgang Leininger

University of Dortmund - Department of Economics ( email )

D-44221 Dortmund
Germany
+49 231 755 3297 (Phone)
+49 231 755 3027 (Fax)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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