On the dynamic stability of a price dispersion model using gradient dynamics

Jean Paul Rabanal; Dongwook Lee

doi:10.1016/j.jedc.2017.08.007

On the dynamic stability of a price dispersion model using gradient dynamics

Jean Paul Rabanal, Dongwook Lee

Research output: Contribution to journal › Article › Research › peer-review

Abstract

This paper studies the evolutionary stability of a unique Nash equilibrium in a price dispersion model (Burdett and Judd, 1983) using gradient dynamics. The numerical solution to the partial differential equation that governs the evolution of prices shows that the stationary equilibrium is not a Nash Equilibrium and that it differs from the cyclical behavior predicted by another family of dynamics, such as replicator and logit, in a continuous action space.

Original language	English
Pages (from-to)	32-42
Number of pages	11
Journal	Journal of Economic Dynamics and Control
Volume	84
DOIs	https://doi.org/10.1016/j.jedc.2017.08.007
Publication status	Published - 1 Nov 2017
Externally published	Yes

Keywords

Evolutionary dynamics
Gradient dynamics
Population games
Price dispersion

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10.1016/j.jedc.2017.08.007

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abstract = "This paper studies the evolutionary stability of a unique Nash equilibrium in a price dispersion model (Burdett and Judd, 1983) using gradient dynamics. The numerical solution to the partial differential equation that governs the evolution of prices shows that the stationary equilibrium is not a Nash Equilibrium and that it differs from the cyclical behavior predicted by another family of dynamics, such as replicator and logit, in a continuous action space.",

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AB - This paper studies the evolutionary stability of a unique Nash equilibrium in a price dispersion model (Burdett and Judd, 1983) using gradient dynamics. The numerical solution to the partial differential equation that governs the evolution of prices shows that the stationary equilibrium is not a Nash Equilibrium and that it differs from the cyclical behavior predicted by another family of dynamics, such as replicator and logit, in a continuous action space.

KW - Evolutionary dynamics

KW - Gradient dynamics

KW - Population games

KW - Price dispersion

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JO - Journal of Economic Dynamics and Control

JF - Journal of Economic Dynamics and Control

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On the dynamic stability of a price dispersion model using gradient dynamics

Abstract

Keywords

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