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A New Approach to Modeling Bertrand Duopoly

Author

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  • Puu, Tonu

Abstract

Bertrand oligopoly needs global demand functions which apply to close substitutes. This is a problem, because economic theory never supplied anything but local definitions for substitutes. Lancaster’s “new theory of demand†is therefore invoked to supply one. In its format one can also quantify closeness of substitutes and incorporate optimisation of design. The present study focuses the pure price dynamics for Bertrand oligopoly when the design of the competing products is given, though quantified through Lancaster’s approach. Resulting is some complex dynamics, including high periodicity and chaos.

Suggested Citation

  • Puu, Tonu, 2017. "A New Approach to Modeling Bertrand Duopoly," Review of Behavioral Economics, now publishers, vol. 4(1), pages 51-67, April.
    • Handle: RePEc:now:jnlrbe:105.00000058
    DOI: 10.1561/105.00000058
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    Citations

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    Cited by:

    1. Gori, Luca & Sodini, Mauro, 2017. "Price competition in a nonlinear differentiated duopoly," Chaos, Solitons & Fractals, Elsevier, vol. 104(C), pages 557-567.
    2. Askar, S.S. & Al-khedhairi, A., 2020. "On complex dynamic investigations of a piecewise smooth nonlinear duopoly game," Chaos, Solitons & Fractals, Elsevier, vol. 139(C).
    3. Sameh Askar, 2021. "Complex Investigations of a Piecewise-Smooth Remanufacturing Bertrand Duopoly Game," Mathematics, MDPI, vol. 9(20), pages 1-13, October.

    More about this item

    Keywords

    Bertrand oligopoly; Lancaster’s new demand; Product design; Complex dynamics;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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