Co-Evolving Better Strategies in Oligopolistic Price Wars

Co-Evolving Better Strategies in Oligopolistic Price Wars

R. Marks (Australian Graduate School of Management, Australia), D. Midgley (INSEAD, France) and L. Cooper (UCLA, USA)
DOI: 10.4018/978-1-59140-984-7.ch052
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Using empirical market data from brand rivalry in a retail ground-coffee market, we model each idiosyncratic brand’s pricing behavior using the restriction that marketing strategies depend only on profit-relevant state variables, and use the genetic algorithm to search for co-evolved equilibria, where each profit-maximizing brand manager is a stimulus-response automaton, responding to past prices in the asymmetric oligopolistic market. This chapter is part of a growing study of repeated interactions and oligopolistic behavior using the GA.

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