Abstract
A simple model of pure competition among a finite number of cautious, adaptive economizing firms is used to explore industrial behavior when outputs are bounded by financial feedback. Identical agents share identical trajectories that can converge to a competitive equilibrium, but the slightest heterogeneity in initial conditions, degree of caution, or in unit costs drives all from the market except a subset of competitors who share identical costs and output levels. Those remaining can converge to a competitive equilibrium. If demand is inelastic at such a point, however, fluctuations in output, perhaps after a prolonged period of profitable growth can arise with profitable periods followed by sharp losses or even a complete collapse.
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