TY - JOUR
T1 - Effects of fixed and continuously distributed delays in a monopoly model with constant price elasticity
AU - Guerrini, Luca
AU - Pecora, Nicolo'
AU - Sodini, Mauro
PY - 2018
Y1 - 2018
N2 - In this paper, we analyze the dynamics of a monopoly model with constant elasticity in which the monopolist faces a form of bounded rationality due to limited accessibility to information. We assume the firm adopts a gradient mechanism to adjust the output level, and we investigate how the introduction of fixed and continuously distributed delays within the resulting continuous-time system may affect the long-run dynamics. We find that the stability of the equilibrium depends on the weighting function adopted to model continuously distributed delays, and the convergence of the realized output toward the steady state is crucially affected by the choice of the delay type which, in turn, reflects the availability and the weight assigned to information. Indeed, depending on the assumptions on modeling delays, the equilibrium point may undergo a Hopf bifurcation after which a limit cycle arises.
AB - In this paper, we analyze the dynamics of a monopoly model with constant elasticity in which the monopolist faces a form of bounded rationality due to limited accessibility to information. We assume the firm adopts a gradient mechanism to adjust the output level, and we investigate how the introduction of fixed and continuously distributed delays within the resulting continuous-time system may affect the long-run dynamics. We find that the stability of the equilibrium depends on the weighting function adopted to model continuously distributed delays, and the convergence of the realized output toward the steady state is crucially affected by the choice of the delay type which, in turn, reflects the availability and the weight assigned to information. Indeed, depending on the assumptions on modeling delays, the equilibrium point may undergo a Hopf bifurcation after which a limit cycle arises.
KW - Bounded rationality
KW - Fixed and continuously distributed delays
KW - Hopf bifurcation
KW - Monopoly
KW - Time delays
KW - Bounded rationality
KW - Fixed and continuously distributed delays
KW - Hopf bifurcation
KW - Monopoly
KW - Time delays
UR - http://hdl.handle.net/10807/127875
UR - http://springerlink.metapress.com/app/home/journal.asp?wasp=e0ggqgqvlk6e7r03eua0&referrer=parent&backto=linkingpublicationresults,1:100169,1
U2 - 10.1007/s10203-018-0222-3
DO - 10.1007/s10203-018-0222-3
M3 - Article
SN - 1593-8883
VL - 41
SP - 239
EP - 257
JO - Decisions in Economics and Finance
JF - Decisions in Economics and Finance
ER -