Title :
The Evolution of Differentiated Duopoly with Adaptive Strategies
Author :
Xie, Wenxin ; Liu, Mengmeng ; Li, Keqiang ; Wang, Yougui
Author_Institution :
Dept. of Syst. Sci., Beijing Normal Univ., Beijing
Abstract :
In this paper we study a duopoly game in which two firms decide their product qualities in the first stage and set prices in the second stage. The two firms are bounded rational so that they adjust the price gradually according to the marginal profit. We examine a discrete dynamic system and analyze stability of the equilibrium. The parameter space for existence of the stable equilibrium is specified. Some numerical evidences are also presented. We conclude that the equilibrium will lose its stability when firms adjust the price unduly. Maximal quality gap will benefit both of them, but the one with high quality may not get advantage when marginal cost is large enough.
Keywords :
discrete systems; game theory; pricing; profitability; differentiated duopoly game; discrete dynamic system; equilibrium stability; marginal cost; marginal profit; maximal quality gap; price; Analytical models; Costs; Game theory; Nash equilibrium; Numerical models; Numerical simulation; Oligopoly; Production; Quality management; Stability analysis;
Conference_Titel :
Wireless Communications, Networking and Mobile Computing, 2008. WiCOM '08. 4th International Conference on
Conference_Location :
Dalian
Print_ISBN :
978-1-4244-2107-7
Electronic_ISBN :
978-1-4244-2108-4
DOI :
10.1109/WiCom.2008.2350
