Multistability and complex dynamics in a simple discrete economic model

Abstract

In this paper, we will propose a generalized Cournot duopoly model with Z 2 symmetry. We demonstrate that cost functions incorporating an interfirm externality lead to a system of couple one-dimensional maps. In the situation where agents take turns, we find in an analytic way that there coexist multiple unstable/stable period-2 cycles or synchronized/asynchronized periodic orbits. Coupling one-dimension chaos can be observed. In a more general situation, where agents move simultaneously, a closer analysis reveals some well-known local bifurcations and global bifurcations which typically occur in two-parameter families of two-dimensional discrete time dynamical systems, including codimension-one (fold-, flip-, Neimark–Sacker-) bifurcations, codimension-two (fold/flip, 1:2 resonance, 1:3 resonance and 1:4 resonance) bifurcations, and hetero-clinic, homo-clinic bifurcations, etc. Multistability, including the coexistence of synchronized/asynchronized solutions are also discussed.