Complex Oligopoly Dynamics
The probably simplest conditions under which the Cournot duopoly model results in complex dynamics, are isoelastic demand and constant marginal costs. One advantage of this combination is that it is possible to solve for the reaction functions in simple closed form. The model is also studied in an adaptive format, in which case the flip bifurcation of the Cournot equilibrium, leading to a period-doubling cascade to chaos, is replaced by a subcritical Neimark bifurcation. The structure of the Arnol’d periodicity tongues, as well as the chaotic areas in parameter space are studied, as is multistability of attractors.
KeywordsBifurcation Diagram Periodic Point Reaction Function Bifurcation Curve Cournot Equilibrium
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