On the Dynamics of a Heterogeneous Duopoly Game in R&D Efforts

Georges Sarafopoulos () and Despoina Terzopoulou ()
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Georges Sarafopoulos: Democritus University of Thrace
Despoina Terzopoulou: Democritus University of Thrace

A chapter in Global, Regional and Local Perspectives on the Economies of Southeastern Europe, 2023, pp 253-263 from Springer

Abstract: Abstract Nowadays, the market competition among the firms has changed. They have to compete not only the price and amount of their products, but also their R&D (Research and Development) part. This paper is based on the work of Zhou et al. (Hindawei, Complexity, Article ID 9634878, 2020). We investigate the dynamics of a duopoly game with heterogeneous players participating in R&D efforts. Existence and stability of equilibria of this system are studied. Numerical simulations are carried out to show the effect of the speed of adjustment of the bounded rational player on the dynamics of the system. We show that the speed of adjustment of the bounded rational player may change the stability of the Nash equilibrium and cause a structure to behave chaotically. For low values of this parameter there is a stable Nash equilibrium. Increasing these values, the equilibrium becomes unstable, through period-doubling bifurcation.

Keywords: Discrete dynamical system; Heterogenous expectations; Stability; Chaotic behavior; R&D; C62; C72; D43 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-34059-8_13

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DOI: 10.1007/978-3-031-34059-8_13

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