Local stability condition of the equilibrium of an oligopoly market with bounded rationality adjustment

摘要

This paper considers an n-firm oligopoly market where each firm produces a single homogenous product under a constant unit cost. Nonlinearity is introduced into the model of this oligopoly market by assuming the market has an isoelastic demand function. Furthermore, instead of the usual assumption of perfectly rational firms, they are assumed to be boundedly rational in adjusting their outputs at each period. The equilibrium of this n discrete dimensional system is obtained and its local stability is calculated.