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Automation and Remote Control

, Volume 78, Issue 1, pp 16–28 | Cite as

Control over chaotic price dynamics in a price competition model

  • E. V. OrlovaEmail author
Nonlinear Systems

Abstract

The dynamic model of price competition in which processes of strategic interaction between companies on an imperfect competition market are described with the game-theoretic approach and methods of nonlinear dynamics. The pricing dynamics for the companies is modeled with difference equations (mappings). We study the stability of the fixed point of the price mapping. Results of our numerical modeling have shown the existence of periodic and chaotic solutions in the price competition model. We present intra-company adaptation mechanisms based on changing the prices in a way proportional to the rate of change in the companies’ profits; this lets us reduce the prices to a local Nash equilibrium and stabilize the chaotic dynamics of the market.

Key words

nonlinear economic dynamics model of price competition periodic and chaotic dynamic modes nonlinear market dynamics control over pricing bifurcation analysis Lyapunov stability strategic interaction between companies Nash equilibrium 

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Copyright information

© Pleiades Publishing, Ltd. 2017

Authors and Affiliations

  1. 1.Ufa State Aviation Technical UniversityUfaRussia

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