Conference PaperPDF Available
Pricing Routines
and
Industrial Dynamics
Isabel Almudi
Francisco Fatas-Villafranca
Jesus Palacio
Julio Sanchez
University of Zaragoza
Structure
Motivation
An evolutionary model (Supply, demand, interactions)
Analysis of the evolutionary model
The Bertrand game (one-shot, repeated)
Conclusions
Motivation
Price Theory as an open issue (Smith, Marx, Schumpeter…)
Arrow-Debreu (1954), Friedman (1962), Lucas & Prescott (1971),
Nelson & Winter (1982), Fudenberg and Tirole (1991), Metcalfe (1998)
Hart & Mas-Colell (2003), Sandholm (2010), Gallegati et al. (2017),
Bloch & Metcalfe (2018).
Recent empirical evidence: evolving complex systems (Dosi et al. 2016; 2017)
-Stylized evolutionary prototype: Price theory on better empirical groundings.
-Comparison with a mainstream exemplar (Bertrand pricing game)
-Lines of advance
An evolutionary model (supply)
1, 1,...,.
̂



,
1,
1
, 
0
An evolutionary model (demand/interactions)
, ,..., (Population Game Mass of Consumers)
, 1,...,.


,
max
;0max
;0



 
 

 .
Market Interactions
 
1


1

1
1
1

2
2
1
1

1
1

1

1
11,2 12
2
2

2

1
1

1

112
3
3
1
1

2

1
1

1
;
221,2 21
1
1

1

2
2

2

112
3
3
1
1

2

2
2

2
.
Dynamics: Evolving duopoly case
Dynamics: Evolving Oligopoly case
Results evolutionary setting:
-Co-existence
-Moderate prices and profits
-Sustainable process
-Moderate levels of consumer welfare
-At least sustainable levels of social welfare
-The model allows us to explore process and add realistic
improvements
-Myopia, Inertia, externalities, asymmetric information,
uncertainty, bounded-rationality and learning, process….
Bertrand pricing duopoly as standard exemplar
Player 2
Cooperate Defect
Player 1
Cooperate 0.5
1,0.5
10, 1
1
Defect 1
1,0 0,0
Table 1.- Payoff matrix for routine
̂
(
1
Results (one shot, repeated)
One shot: (0,0) Bertrand Nash-mutually destructive.
Repeated: Condition for breaking Collusion:
 .


Conclusions
“Market failures” vs Market real traits
Improve evolutionary model to detect real
market failures.
General functions/pricing routines, “n” case.
ResearchGate has not been able to resolve any citations for this publication.
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