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Local and global dynamics in a duopoly with price competition and market share delegation

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  • Fanti, Luciano
  • Gori, Luca
  • Mammana, Cristiana
  • Michetti, Elisabetta

Abstract

This paper aims at studying a nonlinear dynamic duopoly model with price competition and horizontal product differentiation augmented with managerial firms, where managers behave according to market share delegation contracts. Ownership and management are then separate and managers are paid through adequate incentives in order to achieve a competitive advantage in the market. In this context, we show that complexity arises, related both to the structure of the attractors of the system and the structure of their basins, as multistability occurs. The study is conducted by combining analytical and numerical techniques, and aims at showing that slight different initial conditions may cause very different long-term outcomes.

Suggested Citation

  • Fanti, Luciano & Gori, Luca & Mammana, Cristiana & Michetti, Elisabetta, 2014. "Local and global dynamics in a duopoly with price competition and market share delegation," Chaos, Solitons & Fractals, Elsevier, vol. 69(C), pages 253-270.
    • Handle: RePEc:eee:chsofr:v:69:y:2014:i:c:p:253-270
    DOI: 10.1016/j.chaos.2014.10.006
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    References listed on IDEAS

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    Cited by:

    1. Brianzoni, Serena & Gori, Luca & Michetti, Elisabetta, 2015. "Dynamics of a Bertrand duopoly with differentiated products and nonlinear costs: Analysis, comparisons and new evidences," Chaos, Solitons & Fractals, Elsevier, vol. 79(C), pages 191-203.

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