Price competition in a nonlinear differentiated duopoly

Luca Gori () and Mauro Sodini

Chaos, Solitons & Fractals, 2017, vol. 104, issue C, 557-567

Abstract: This article represents an attempt to characterise the dynamics of a nonlinear duopoly with price competition and horizontal product differentiation by accounting for non-negativity constraints (on profits and the market demand). The model is set up by following the tradition led by Bischi et al. (1998), according to which players have limited information. The article shows several local and global phenomena of a two-dimensional discrete time system when the price demand elasticity varies. It also points out the differences from both a mathematical and economic point of views in terms of dynamic outcomes when the non-negativity constraints are not binding and when they are binding. This is done by combining mathematical techniques and simulation exercises.

Keywords: Chaos; Local and global bifurcations; Price competition; Product differentiation (search for similar items in EconPapers)
JEL-codes: C62 D43 L13 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chsofr:v:104:y:2017:i:c:p:557-567

DOI: 10.1016/j.chaos.2017.09.009

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