The evolution of price competition game on complex networks
type: Item
instance of: scholarly article
title: The evolution of price competition game on complex networks
zbMATH Open document ID: 1398.91083
DOI: 10.1155/2018/9649863
author: Feng Jie Xie
author: Jing Shi
published in: Complexity
publication date: 2018-10-04T00:00:00Z
review text: Summary: The well-known ``Bertrand paradox'' describes a price competition game in which two competing firms reach an outcome where both charge a price equal to the marginal cost. The fact that the Bertrand paradox often goes against empirical evidences has intrigued many researchers. In this work, we study the game from a new theoretical perspective -- an evolutionary game on complex networks. Three classic network models, square lattice, WS small-world network, and BA scale-free network, are used to describe the competitive relations among the firms which are bounded rational. The analysis result shows that full price keeping is one of the evolutionary equilibriums in a well-mixed interaction situation. Detailed experiment results indicate that the price-keeping phenomenon emerges in a square lattice, small-world network and scale-free network much more frequently than in a complete network which represents the well-mixed interaction situation. While the square lattice has little advantage in achieving full price keeping, the small-world network and the scale-free network exhibit a stronger capability in full price keeping than the complete network. This means that a complex competitive relation is a crucial factor for maintaining the price in the real world. Moreover, competition scale, original price, degree of cutting price, and demand sensitivity to price show a significant influence on price evolution on a complex network. The payoff scheme, which describes how each firm's payoff is calculated in each round game, only influences the price evolution on the scale-free network. These results provide new and important insights for understanding price competition in the real world.
Mathematics Subject Classification ID: 91A22
Mathematics Subject Classification ID: 91B24
zbMATH DE Number: 6946965
zbMATH Keywords: price competition game
zbMATH Keywords: Bertrand paradox
zbMATH Keywords: empirical evidence
zbMATH Keywords: evolutionary game on complex networks
MaRDI profile type: Publication
full work available at URL: https://doi.org/10.1155/2018/9649863
OpenAlex ID: W2821994747
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description: scientific article; zbMATH DE number 6946965