Abstract
In this study, we model a dynamic R&D two-stage input competition triopoly game characterized by players with a bounded rationality rule as a discrete nonlinear dynamic system, where we focus on spillover effects on cost reductions. We analyze the stability of the Nash equilibrium and obtain the stability conditions and the stability region. We show that the Nash equilibrium loses its stability and complex dynamic behaviors occur after increasing the input adjustment speed parameters. Finally, the straight-line stabilization method is applied for chaos control. The results obtained have theoretical implications for manufacturers regarding R&D input decisions in real economic markets.
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