Cournot versus Walras in Dynamic Oligopolies with Memory

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 outcomes correspond to all the quantities in the interval tension between the evolutionary stability associated to the walrasian outcome, which relies on inter-firm comparisons of simultaneous profits, and the stability of the Cournot-Nash equilibrium, derived from intertemporal comparisons of profits.