SIMPLE AND COMPLEX ADJUSTMENT DYNAMICS IN COURNOT DUOPOLY MODELS

We are investigating microeconomic foundations of Cournot duopoly game s such that the reaction functions are unimodal. We demonstrate that c ost functions incorporating an interfirm externality lead to a system of coupled logistic equations. In the situation where agents take turn s, we observe periodic and complex behavior. A closer analysis reveals some well-known local bifurcations. In a more general situation, wher e agents move simultaneously, we observe global bifurcations which typ ically occur in two-parameter families of two-dimensional endomorphism s. Copyright (C) 1996 Elsevier Science Ltd.