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

Study on the concession and damping equilibrium of duopoly strategic output based on bounded... 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Services Operations and Informatics Inderscience Publishers

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

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Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd. All rights reserved
ISSN
1741-539X
eISSN
1741-5403
DOI
10.1504/IJSOI.2008.021342
Publisher site
See Article on Publisher Site

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.

Journal

International Journal of Services Operations and InformaticsInderscience Publishers

Published: Jan 1, 2008

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