On the dynamics of economic games based on product differentiation

Joaquin Andaluz and Gloria Jarne

Mathematics and Computers in Simulation (MATCOM), 2015, vol. 113, issue C, 16-27

Abstract: Defining a micro-economics-based demand structure of differentiated products, we analyse the conditions for stability of the Cournot–Nash and the Bertrand–Nash equilibria. We find that, in the presence of both complements and substitute goods, the stability of the Nash equilibrium increases when goods tend to be independent. Moreover, the Nash equilibrium is also more stable under quantity competition than under price competition, regardless of whether goods are complements or substitutes.

Keywords: Product differentiation; Bertrand–Nash competition; Cournot–Nash competition; Bounded rationality; Dynamic stability (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:matcom:v:113:y:2015:i:c:p:16-27

DOI: 10.1016/j.matcom.2015.02.005

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