Convergence analysis and algorithmic implications of two dynamic processes toward an oligopolycompetitive fringe equilibrium solution

Abstract This paper considers a market in which an oligopoly coexists along with a competitive fringe, all firms supplying a homogeneous product noncooperatively. The oligopoly is comprised of a few major firms whereas the competitive fringe is comprised of several smaller firms. For such a situation, two dynamic production-level readjustment processes are described. One of these processes is proven to converge to an equilibrium solution, whereas for the other process, it is demonstrated that a state of disequilibrium may persist. Algorithmic implications as well as economic interpretations of these two processes are provided. The presentation is exemplified through numerical examples and graphical illustrations.

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