Evolutionary game theoretic approach to Bertrand Duopoly Model using adaptive dynamics

The Bertrand Duopoly (BD) is a competition of rms aiming to achieve dominance in a certain market. In this competition, the Nash equilibrium is attained when rms set prices equal to the unit cost of the product. This results to the Bertrand paradox in which rms attain zero profit in contrast to real...

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Main Author: Castillo, Marnel Rae R.
Format: text
Language:English
Published: Animo Repository 2016
Online Access:https://animorepository.dlsu.edu.ph/etd_masteral/5191
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Institution: De La Salle University
Language: English
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spelling oai:animorepository.dlsu.edu.ph:etd_masteral-120292024-06-18T00:57:45Z Evolutionary game theoretic approach to Bertrand Duopoly Model using adaptive dynamics Castillo, Marnel Rae R. The Bertrand Duopoly (BD) is a competition of rms aiming to achieve dominance in a certain market. In this competition, the Nash equilibrium is attained when rms set prices equal to the unit cost of the product. This results to the Bertrand paradox in which rms attain zero profit in contrast to realistic goals of achieving positive profits. In this study, an evolutionary game dynamics is applied to the BD model to resolve this paradox. The rst step is to develop a smoothed continuous function for the Bertrand Duopoly game which will address the probability of consumers choosing the products with the higher price. Using this smoothed Bertrand Duopoly model, we need to apply the adaptive dynamics to deter- mine the existence of evolutionary stable strategy (ESS) which will guarantee that the prices will converge to the equilibrium price, and not equal to the unit cost. To validate this result, we utilize an agent-based simulation through Net- Logo software, as a tool allowing the user to control the actions of agents. 2016-01-01T08:00:00Z text https://animorepository.dlsu.edu.ph/etd_masteral/5191 Master's Theses English Animo Repository
institution De La Salle University
building De La Salle University Library
continent Asia
country Philippines
Philippines
content_provider De La Salle University Library
collection DLSU Institutional Repository
language English
description The Bertrand Duopoly (BD) is a competition of rms aiming to achieve dominance in a certain market. In this competition, the Nash equilibrium is attained when rms set prices equal to the unit cost of the product. This results to the Bertrand paradox in which rms attain zero profit in contrast to realistic goals of achieving positive profits. In this study, an evolutionary game dynamics is applied to the BD model to resolve this paradox. The rst step is to develop a smoothed continuous function for the Bertrand Duopoly game which will address the probability of consumers choosing the products with the higher price. Using this smoothed Bertrand Duopoly model, we need to apply the adaptive dynamics to deter- mine the existence of evolutionary stable strategy (ESS) which will guarantee that the prices will converge to the equilibrium price, and not equal to the unit cost. To validate this result, we utilize an agent-based simulation through Net- Logo software, as a tool allowing the user to control the actions of agents.
format text
author Castillo, Marnel Rae R.
spellingShingle Castillo, Marnel Rae R.
Evolutionary game theoretic approach to Bertrand Duopoly Model using adaptive dynamics
author_facet Castillo, Marnel Rae R.
author_sort Castillo, Marnel Rae R.
title Evolutionary game theoretic approach to Bertrand Duopoly Model using adaptive dynamics
title_short Evolutionary game theoretic approach to Bertrand Duopoly Model using adaptive dynamics
title_full Evolutionary game theoretic approach to Bertrand Duopoly Model using adaptive dynamics
title_fullStr Evolutionary game theoretic approach to Bertrand Duopoly Model using adaptive dynamics
title_full_unstemmed Evolutionary game theoretic approach to Bertrand Duopoly Model using adaptive dynamics
title_sort evolutionary game theoretic approach to bertrand duopoly model using adaptive dynamics
publisher Animo Repository
publishDate 2016
url https://animorepository.dlsu.edu.ph/etd_masteral/5191
_version_ 1802997494242607104