The application of cellular automata to the consumer’s theory: Simulating a duopolistic market

Abstract

This paper presents a cellular automata model of a duopolistic market with consumers' leraning and network externalities. The model produces various dynamics of the market. In particular, if the user cost can locally be different, it generates such rich dynamics that aggregate models could not explain. The results of simulations also suggest that the long-run consequence of duopolistic competition may crucially depends on the initial condition.