 The complexion of dynamic duopoly game with horizontal differentiated productsWeisheng Yu and Yu Yu Economic Modelling, 2014, vol. 41, issue C, 289-297 Abstract: In this paper, firms are considered on the hypothesis of having incomplete rationality expectation and incomplete information of the market to get the dynamic development of price competition behavior in the Hotelling model (Hotelling, 1929). Under the assumption of the heterogeneous expectations of two firms, we have observed that the Nash equilibrium price can be a dynamic equilibrium to realize when the speed of price adjustment is lower. However, the numerical simulation shows that the system may present a periodic and chaotic status when the speed of price adjustment is higher. The effect of the degree of horizontal differentiation on the stability of Nash equilibrium of the system is also discussed. We have a different conclusion from Lucino Fanti and Luca Gori's (2012); that is the greater the degree of product horizontal differentiation is, the more stable the Nash equilibrium of the system is. Keywords: The degree of product differentiation; Duopoly game; Stability; Chaos; Hotelling model (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:41:y:2014:i:c:p:289-297 DOI: 10.1016/j.econmod.2014.05.024 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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