Global and Local Analysis for a Cournot Duopoly Game with Two Different Objective Functions

Sameh Askar, Abdulaziz Foul, Tarek Mahrous, Saleh Djemele and Emad Ibrahim
Additional contact information
Sameh Askar: Department of Statistics and Operations Research, College of Science, King Saud University, P.O. Box 2455, Riyadh 11451, Saudi Arabia
Abdulaziz Foul: Department of Statistics and Operations Research, College of Science, King Saud University, P.O. Box 2455, Riyadh 11451, Saudi Arabia
Tarek Mahrous: Department of Statistics and Operations Research, College of Science, King Saud University, P.O. Box 2455, Riyadh 11451, Saudi Arabia
Saleh Djemele: Department of Statistics and Operations Research, College of Science, King Saud University, P.O. Box 2455, Riyadh 11451, Saudi Arabia
Emad Ibrahim: Department of Statistics and Operations Research, College of Science, King Saud University, P.O. Box 2455, Riyadh 11451, Saudi Arabia

Mathematics, 2021, vol. 9, issue 23, 1-14

Abstract: In this paper, a Cournot game with two competing firms is studied. The two competing firms seek the optimality of their quantities by maximizing two different objective functions. The first firm wants to maximize an average of social welfare and profit, while the second firm wants to maximize their relative profit only. We assume that both firms are rational, adopting a bounded rationality mechanism for updating their production outputs. A two-dimensional discrete time map is introduced to analyze the evolution of the game. The map has four equilibrium points and their stability conditions are investigated. We prove the Nash equilibrium point can be destabilized through flip bifurcation only. The obtained results show that the manifold of the game’s map can be analyzed through a one-dimensional map whose analytical form is similar to the well-known logistic map. The critical curves investigations show that the phase plane of game’s map is divided into three zones and, therefore, the map is not invertible. Finally, the contact bifurcation phenomena are discussed using simulation.

Keywords: cobweb model; dynamics; gradient mechanism; stability; bifurcation (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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