Abstract
The economic world is very dynamic, and most phenomena appearing in this world are mutually interconnected. These connections may result in the emergence of nonlinear relationships among economic agents. Research discussions about different markets’ structures cannot be considered as finished yet. Even such a well-known concept as oligopoly can be described with different models applying diverse assumptions and using various values of parameters; for example, the Cournot duopoly game, Bertrand duopoly game or Stackelberg duopoly game can be and are used. These models usually assume linear functions and make analyses of the behavior of the two companies. The aim of this paper is to consider a nonlinear inverse demand function in the Cournot duopoly model. Supposing there is a sufficiently large proportion among the costs of the two companies, we can possibly detect nonlinear phenomena such as bifurcation of limit values of production or deterministic chaos. To prove a sensitive dependence on the initial condition, which accompanies deterministic chaos, the concept of Lyapunov exponents is used. We also point out the fact that even though some particular values of parameters are irrelevant for the above-mentioned nonlinear phenomena, it is worth being aware of their existence.
Highlights
One of the impacts of globalization is the existence of very rich and powerful corporations in the economic world
It is well known that oligopoly markets consider a few producers of the same goods or perfectly substitutable goods
The essential assumption linked with the nonlinear model is that of a nonlinear inverse demand function
Summary
One of the impacts of globalization is the existence of very rich and powerful corporations in the economic world. These corporations are usually multinational and of a considerable size, and they can have a significant impact on setting the prices in particular markets [1]. Trading can be completely controlled by several companies. This is the reason why the oligopoly structure of markets and their different models are constantly studied and modified. Different nonlinear versions of oligopoly models can be found in [2] or [3], where the assumption of unimodal reaction functions was established. Each company must reflect on the market demand, and on the competitors’
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
