Strategy bifurcation and spatial inhomogeneity in a simple model of competing sellers

 SUPA, School of Physics, The University of Edinburgh - Mayfield Road, Edinburgh EH9 3JZ, UK

Corresponding authors: lawrence.mitchell@ed.ac.uk g.j.ackland@ed.ac.uk

Received: 5 April 2007
Accepted: 3 July 2007

Abstract

We present a simple one-parameter model for spatially localised evolving agents competing for spatially localised resources. The model considers selling agents able to evolve their pricing strategy in competition for a fixed market. Despite its simplicity, the model displays extraordinarily rich behaviour. In addition to “cheap” sellers pricing to cover their costs, “expensive” sellers spontaneously appear to exploit short-term favourable situations. These expensive sellers “speciate” into discrete price bands. As well as variety in pricing strategy, the “cheap” sellers evolve a strongly correlated spatial structure, which in turn creates niches for their expensive competitors. Thus an entire ecosystem of coexisting, discrete, symmetry-breaking strategies arises.