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Complex Dynamics in Simple Cournot Duopoly Games

Author

Listed:
  • Diana A. Mendes

    (ISCTE - Department of Quantitative Methods and UNIDE-StatMath)

  • Vivaldo M. Mendes

    (ISCTE - Department of Economics and UNIDE-ERC)

  • Orlando Gomes

    (Instituto Politécnico de Lisboa - Escola Superior de Comunicação Social and UNIDE-ERC)

Abstract

The main aim of this paper is to analyse the dynamics of nonlinear discrete-time maps generated by duopoly games with heterogeneous and quadratic cost functions, in which players do not form expetations about the rival’s actions accordingto the ratioal expectations hypothesis. We discusse here two cases. In the first one we introduce games with boundedly rational players and in the second one games with adaptive expectations. The dynamics are mainly analysed by numerical simulations. There are always multiple equilibria, and the significance of the Nash equilibria is pointed out.

Suggested Citation

  • Diana A. Mendes & Vivaldo M. Mendes & Orlando Gomes, 2008. "Complex Dynamics in Simple Cournot Duopoly Games," Working Papers Series 1 ercwp1008, ISCTE-IUL, Business Research Unit (BRU-IUL).
    • Handle: RePEc:isc:iscwp1:ercwp1008
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    File URL: http://bru-unide.iscte.pt/RePEc/pdfs/ERCwp1008.pdf
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    References listed on IDEAS

    as
    1. Bischi, Gian Italo & Kopel, Michael, 2001. "Equilibrium selection in a nonlinear duopoly game with adaptive expectations," Journal of Economic Behavior & Organization, Elsevier, vol. 46(1), pages 73-100, September.
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