The market

This chapter focuses on the decisions of firms and demonstrates how agent-based modelling can easily accommodate the dynamic and interactive nature of markets. We present three models. The first is based on Cournot's classic model of duopoly and its Nash equilibrium but introduces the possibility of inaccurate information. The second model is based on small shops in the real world that do not have the benefit of perfect foresight that is granted to firms operating under perfect competition and illustrates the dynamics of survival. The final model reflects business in the digital world, where there is no limit on capacity.