Co-Evolving Better Strategies in Oligopolistic Price Wars

Abstract

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.