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Stability analysis in a Cournot duopoly with managerial sales delegation and bounded rationality

Fanti, Luciano and Gori, Luca (2011): Stability analysis in a Cournot duopoly with managerial sales delegation and bounded rationality.

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Abstract

The present study analyses the dynamics of a Cournot duopoly with managerial sales delegation and bounded rational players. We find that when firms’ owners hire a manager and delegate the output decisions to him, the unique Cournot-Nash equilibrium is more likely to be destabilised (through a flip bifurcation) than when firms maximise profits. Moreover, highly periodicity and deterministic chaos can also occur as the managers’ bonus increases.

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