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Irrationality and monopolistic competition: An...
Journal article

Irrationality and monopolistic competition: An evolutionary approach

Abstract

This paper shows that a monopolistically competitive equilibrium can evolve without purposive profit maximization. Specifically, this paper formulates a precise evolutionary dynamic model of an industry where there is continuous entry of firms that randomly select their output levels on entry and fix their output levels thereafter. Firms exit the industry if they fail to pass the survival test of making nonnegative wealth. This paper shows that …

Authors

Luo GY

Journal

European Economic Review, Vol. 53, No. 5, pp. 512–526

Publisher

Elsevier

Publication Date

July 2009

DOI

10.1016/j.euroecorev.2008.09.001

ISSN

0014-2921