This is a short book. It aims to get across the essential elements of dynamics
that are used in modern treatments of the subject. More significantly, it aims
to do this through the means of examples. Some of these examples are purely
algebraic. But many others consider economic models: both microeconomic
and macroeconomic. Macroeconomics is replete with dynamic models – some
simple and others quite complex. But this is not true of microeconomics.
The Santa Fe Institute (SFI) is interested in understanding evolving complex
social, biological, and physical adaptive systems in a most general sense
(see Cowan et al. 1994). Those of us at SFI interested in the evolution of
social behavior have tended to focus on either small-scale societies or on specific
aspects of more complex societies, such as the economy.
The vast majority of U.S. residential consumers face a monopoly
or duopoly in broadband Internet access. Until now, the Internet has been
characterized by a regime of “net neutrality,” which means there has been no
discrimination between the price of transmitting packets based on the
identity of either the transmitter or the identity of the receiver, based on the
application, or the type of content the packet contains.
Some authors have modeled the multiproduct price competition in dierentiated
goods where, as in our model, consumers can engage in mixing purchases between shops.
Lal and Matutes (1989) have studied price competition in a duopoly selling two independent
goods. They nd that in equilibrium retailers will charge dierent but deterministic
prices and may even capture the entire consumer surplus of the less mobile consumers.