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Journal of Dynamics and Games (JDG)
 

Global analysis of solutions on the Cournot-Theocharis duopoly with variable marginal costs

Pages: 25 - 39, Volume 4, Issue 1, January 2017      doi:10.3934/jdg.2017002

 
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Iraklis Kollias - National and Kapodistrian University of Athens, Department of Economics, Sofokleous 1, 10559, Athens, Greece (email)
Elias Camouzis - National and Kapodistrian University of Athens, Department of Economics, Sofokleous 1, 10559, Athens, Greece (email)
John Leventides - National and Kapodistrian University of Athens, Department of Economics, Sofokleous 1, 10559, Athens, Greece (email)

Abstract: In this article, we study the Cournot-Theocharis duopoly with variable marginal cost. We present sufficient conditions such that, both firms enter the market at any stage, remain in the market, and maximize their profit at any stage. We suggest cost implementation strategies, under which the market might benefit from the variability of marginal cost. We exhibit strategies, for which, the variability of marginal cost might be hazardous for the duopoly competitors. We prove that there exist cases, in which the market forms cycles of length six. Within each cycle, there is an interchange between monopolies and duopolies. Finally, we present some new ideas to establish monopoly convergence under certain monopoly conditions.

Keywords:  Cournot duopoly, Cournot equilibrium, systems of difference equations, stability, marginal cost, variable coefficients, monopoly convergence, cycles.
Mathematics Subject Classification:  Primary: 91B02; Secondary: 91B24.

Received: July 2016;      Revised: November 2016;      Available Online: December 2016.

 References