Change search
ReferencesLink to record
Permanent link

Direct link
Cournot duopoly when the competitors operate multiple production plants
Department of Economics, Ancona University, Italy.
Department of Economics and Quantitative Methods, Urbino University, Italy.
Umeå University, Faculty of Social Sciences, Centre for Regional Science (CERUM).
2009 (English)In: Journal of Economic Dynamics and Control, ISSN 0165-1889, Vol. 33, no 1, 250-265 p.Article in journal (Refereed) Published
Abstract [en]

This article considers a Cournot duopoly under an isoelastic demand function and cost functions with built-in capacity limits. The special feature is that each firm is assumed to operate multiple plants, which can be run alone or in combination. Each firm has two plants with different capacity limits, so each has three cost options, the third being to run both plants, dividing the load according to the principle of equal marginal costs. As a consequence, the marginal cost functions come in three disjoint pieces, so the reaction functions, derived on basis of global profit maximization, may also consist of disjoint pieces. This is reflected in a particular bifurcation structure, due to border-collision bifurcations and to particular basin boundaries, related to the discontinuities. It is shown that stable cycles may coexist, and the non-existence of unstable cycles constitutes a new property. We also compare the coexistent short periodic solutions in terms of the resulting real profits.

Place, publisher, year, edition, pages
2009. Vol. 33, no 1, 250-265 p.
Keyword [en]
Duopoly; Capacity limits, Border-collision bifurcations, Discontinuous reaction functions
National Category
URN: urn:nbn:se:umu:diva-24519DOI: 10.1016/j.jedc.2008.06.001OAI: diva2:226623
Available from: 2009-07-02 Created: 2009-07-02

Open Access in DiVA

No full text

Other links

Publisher's full text

Search in DiVA

By author/editor
Puu, Tönu
By organisation
Centre for Regional Science (CERUM)
In the same journal
Journal of Economic Dynamics and Control

Search outside of DiVA

GoogleGoogle Scholar
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

Altmetric score

Total: 33 hits
ReferencesLink to record
Permanent link

Direct link