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Discrete Dynamics in Nature and Society
Volume 2008, Article ID 905143, 20 pages
Research Article

Triumph over Your Rivals in Dynamic Oligopoly

Division of Economics, School of Humanities and Social Science, Nanyang Technological University, Nanyang Avenue, Singapore 639798

Received 23 March 2008; Accepted 10 July 2008

Academic Editor: Akio Matsumoto

Copyright © 2008 Weihong Huang. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


Challenging the conventional belief that sophistication in strategy is always better, it was found in W. Huang (2002a) that a price-taker who adopts the Cobweb strategy yields higher profits than those who adopt more sophisticated strategies. This study explores the possibility of improving further the relative profit advantage that the price-taker has over its counterparts through incorporating the growth-rate adjustment strategy. A linear heterogenous oligopoly model is used to illustrate the merits of such strategy in the case of disequilibrium. It is shown in theory and supported with numerical simulations that the adoption of growth-rate adjustment strategy together with price-taking strategy confers on the price-taker the stabilization power in a dynamically unstable market in addition to better relative performance in terms of major performance measures.