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Zbl 1232.91480
Wu, Wenjuan; Chen, Zengqiang; Ip, W.H.
Complex nonlinear dynamics and controlling chaos in a Cournot duopoly economic model. (English)
[J] Nonlinear Anal., Real World Appl. 11, No. 5, 4363-4377 (2010). ISSN 1468-1218

Summary: Complex nonlinear economic dynamics in a Cournot duopoly model proposed by M. Kopel is studied in detail in this work. By utilizing the topological horseshoe theory proposed by X. S. Yang, the authors detect the topological horseshoe chaotic dynamics in the Cournot duopoly model for the first time, and also give the rigorous computer-assisted verification for the existence of horseshoe. In the process of the proof, the topological entropy of the Cournot duopoly model is estimated to be bigger than zero, which implies that this economic system definitely exhibits chaos. In particular, the authors observe two different types of economic intermittencies, including the Pomeau-Manneville type-I intermittency arising near a saddle-node bifurcation, and the crisis-induced attractor widening intermittency caused by the interior crisis, which lead to the appearance of intermittency chaos. The authors also observe the transient chaos phenomenon which leads to the destruction of chaotic attractors. All these intermittency phenomena will help us to understand the similar dynamics observed in the practical stock market and the foreign exchange market. Besides, the Nash-equilibrium profits and the chaotic long-run average profits are analyzed. It is numerically demonstrated that both firms can have higher profits than the Nash-equilibrium profits, that is to say, both of the duopolists could be beneficial from a chaotic market. The controlled Cournot duopoly model can make one firm get more profit and reduce the profit of the other firm, and control the system to converge to an equilibrium state, where the two duopolists share the market equally.

MSC 2000:: *91B54 Special types of economies
91B55

Keywords: economic chaos; topological horseshoe; intermittency chaos; chaos control

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