Evolutionary Consumers Imply Monopolies Exit

14 Pages Posted: 14 Nov 2018

Date Written: November 2018

Abstract

We address the question of how a monopolist should price when facing evolutionary consumers who gradually move in the direction of following their optimal strategy but may make temporary suboptimal choices. We show that under a broad generalization of the most commonly used model of evolution, the monopolist will set a path of prices such that all consumers eventually stop purchasing the monopolist's product.

Suggested Citation

Hummel, Patrick and McAfee, Randolph Preston, Evolutionary Consumers Imply Monopolies Exit (November 2018). International Economic Review, Vol. 59, Issue 4, pp. 1733-1746, 2018. Available at SSRN: https://ssrn.com/abstract=3283995 or http://dx.doi.org/10.1111/iere.12318

Patrick Hummel (Contact Author)

Google Inc. ( email )

1600 Amphitheatre Parkway
Second Floor
Mountain View, CA 94043
United States

Randolph Preston McAfee

Yahoo! - Yahoo! Research Labs ( email )

Sunnyvale, CA 94089
United States

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