TEL  Vol.4 No.2 , March 2014
Dynamic Monopoly with Demand Delay

This study analyses the dynamics of nonlinear monopoly. To this end, the conventional assumptions in the text-book monopoly are modified; first, the complete information on the market is replaced with the partial information; second, the instantaneous information is substituted by the delay information. As a result, since such a monopoly is unable to jump, with one shot, to the optimal point for which the profit is maximized, the monopoly has to search for it. In a continuoustime framework, the delay destabilizes the otherwise stable monopoly model and generates cyclic oscillations via a Hopf bifurcation. In a discrete-time framework, the steady state bifurcates to a bounded oscillation via a Neimark-Sacker bifurcation. Although this has been only an introduction of delay into the traditional monopoly model, it is clear that the delay can be a source of essentially different behavior from those of the nondelay model.

Cite this paper
Matsumoto, A. and Szidarovszky, F. (2014) Dynamic Monopoly with Demand Delay. Theoretical Economics Letters, 4, 146-154. doi: 10.4236/tel.2014.42022.
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