Study on the concession and damping equilibrium of duopoly strategic output based on bounded rationality and knowledge

Zhigeng Fang, Sifeng Liu, Guanghua Qiu, Hongxing Shi, Aiqing Ruan

Research output: Contribution to journalArticle

Abstract

The fatal weakness of the classical Cournot oligopoly model and current output-decision-making models is the supposition that player always pursues the maximum of present interest. This paper establishes some new hypotheses, including goal supposition, time-order assumption, bounded rationality and finite knowledge hypothesis, and constructs a generic model for realistic decision-making situations. The model should better fit into real strategic decision-making process between the leader and follower oligopolies (i.e. companies or players). Moreover, the arithmetic method, natures and characteristics of output decision-making are well studied in this research. This research gives and proves ten important propositions and four relevant deductions. The conceptions of damping loss and total damping cost of a completely dominated marketplace by the leader oligopoly are proposed; relevant algorithms and examples are also provided.

Original languageEnglish (US)
Pages (from-to)318-339
Number of pages22
JournalInternational Journal of Services Operations and Informatics
Volume3
Issue number3-4
DOIs
StatePublished - Dec 5 2008

Fingerprint

Damping
Decision making
Duopoly
Concession
Bounded rationality
Costs
Industry
Oligopoly
Decision-making model
Strategic decision making
Deduction
Follower
Cournot oligopoly
Decision-making process
Conception
Nature

All Science Journal Classification (ASJC) codes

  • Management Information Systems
  • Information Systems
  • Computer Science Applications
  • Management Science and Operations Research

Cite this

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abstract = "The fatal weakness of the classical Cournot oligopoly model and current output-decision-making models is the supposition that player always pursues the maximum of present interest. This paper establishes some new hypotheses, including goal supposition, time-order assumption, bounded rationality and finite knowledge hypothesis, and constructs a generic model for realistic decision-making situations. The model should better fit into real strategic decision-making process between the leader and follower oligopolies (i.e. companies or players). Moreover, the arithmetic method, natures and characteristics of output decision-making are well studied in this research. This research gives and proves ten important propositions and four relevant deductions. The conceptions of damping loss and total damping cost of a completely dominated marketplace by the leader oligopoly are proposed; relevant algorithms and examples are also provided.",
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Study on the concession and damping equilibrium of duopoly strategic output based on bounded rationality and knowledge. / Fang, Zhigeng; Liu, Sifeng; Qiu, Guanghua; Shi, Hongxing; Ruan, Aiqing.

In: International Journal of Services Operations and Informatics, Vol. 3, No. 3-4, 05.12.2008, p. 318-339.

Research output: Contribution to journalArticle

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