Detecting Chaos in a Duopoly Model via Symbolic Dynamics

• This paper considers a Cournot duopoly model assuming isoelastic demand and smooth cost functions with built-in capacity limits. When the firms cannot obtain positive profits they are assumed to choose small "stand-by" outputs rather than closing down, in order to avoid substantial fitting up costs when market conditions turnout more favorable. It is shown that the model provides chaotic behavior. In particular, the system has positive topological entropy and hence the map is chaotic in the Li-Yorke sense. Moreover, chaos is not only topological but also physically observable.

Ämnesord

NATURVETENSKAP  -- Matematik -- Beräkningsmatematik (hsv//swe)

NATURAL SCIENCES  -- Mathematics -- Computational Mathematics (hsv//eng)

Nyckelord

duopoly games

topological entropy

Li-Yorke chaos

nonautonomous systems

Applied mathematics

Tillämpad matematik

Publikations- och innehållstyp

ref (ämneskategori)

art (ämneskategori)