We found that specialization is driven by two distinct mechanisms working together. Second, competition among multiple brokers encourages them to become monopolists in largely non-overlapping sets of one or a few categories. Niche specialization is typically desirable from the perspective of both the brokers and the consumers.
Price wars undermine the tendency of the system to efficiently self-organize itself.
We found that cyclic price wars could be eliminated in a system of brokers and consumers that had little knowledge of the system state and very simplistic algorithms for updating prices and interests, permitting useful specialization to occur. However, one cannot conclude that individual ignorance leads to societal bliss. The conservative price-setting strategy makes the system less nimble, and more susceptible to failure. Other effects that may hinder price wars in human economies, such as explicit and tacit collusion, frictional effects, and spatial or informational differentiation are likely to be weaker in agent economies. Price wars may indeed prove to be a serious problem to contend with in large agent economies of any sort, and merit our continued attempts to understand and control them.