Modeling Uncertainty

Volume 46 of the series International Series in Operations Research & Management Science pp 249-268

The Birth of Limit Cycles in Nonlinear Oligopolies with Continuously Distributed Information Lags

  • Carl ChiarellaAffiliated withSchool of Finance and Economics, University of Technology Sydney
  • , Ferenc SzidarovszkyAffiliated withDepartment of Systems and Industrial Engineering, University of Arizona Tucson

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The dynamic behavior of the output in nonlinear oligopolies is examined when the equilibrium is locally unstable. Continuously distributed time lags are assumed in obtaining information about rivals’ output as well as in obtaining or implementing information about the firms’ own output. The Hopf bifurcation theorem is used to find conditions under which limit cycle motion is born. In addition to the classical Cournot model, labor managed and rent seeking oligopolies are also investigated.