"Cournot versus Walras in dynamic oligopolies with memory"
JEL codes: C72, D83, L13
Keywords: memory, imitation, mutation, Cournot, Walras
Abstract: This paper explores the impact of memory in Cournot oligopolies where firms learn through imitation of success as suggested in Alchian (1950) and modeled in Vega-Redondo (1997). As long as memory includes at least one period, the long-run outcome corresponds to any quantity between the Cournot one and the Walras one. The (evolutionary) stability of the walrasian outcome relies on inter-firm comparisons of simultaneously observed profits (i.e. whether a firm earns more than others in a given period), whereas the stability of the Cournot-Nash equilibrium is derived from intertemporal comparisons of profits for each given firm (i.e. whether a deviation pays off for that firm).