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Third International Joint Conference on Autonomous Agents and Multiagent Systems - Volume 3 (AAMAS'04)
The Impact of Communication Costs and Limitations on Price Wars in an Information Economy
New York City, New York, USA
July 19-July 23
ISBN: 0-7695-2092-8
Jianhui Wu, University of Michigan
Edmund H. Durfee, University of Michigan
Price wars — the iterative undercutting of prices to the marginal cost by competitors — have frequently emerged in models of economic systems populated by computational agents. In this paper, we explore the prevalence and severity of price wars in models of multiagent ecommerce systems that include costs and limitations on interagent communication. The empirical results we describe in this paper indicate that, for a stationary consumer population, limiting the rate of penetration of price information can reduce the severity of price wars, and that charging producer agents for communication can in fact curtail price-undercutting before prices (and profits) bottom out. Furthermore, prices (and profits) do not bottom out for non-stationary consumer populations, where in fact cyclic price wars can arise.
Citation:
Jianhui Wu, Edmund H. Durfee, "The Impact of Communication Costs and Limitations on Price Wars in an Information Economy," aamas, vol. 3, pp.1205-1212, Third International Joint Conference on Autonomous Agents and Multiagent Systems - Volume 3 (AAMAS'04), 2004
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