Complexity in a Monopoly Market with a General Demand and Quadratic Cost Function

In this paper we extend the work done by Askar, 2013. (Askar, S.S., 2013. On complex dynamics of monopoly market, Economic Modelling, 31, 586-589). The equilibrium state of a bounded rational monopolist model is studied. It is assumed that the entire demand has a general non-linear form and the cost function is quadratic. The equilibrium of the model is equal to the level of price that maximizes profits, as can be seen in the classical microeconomic theory. However, complex dynamics can arise and the stability of equilibrium state is discussed. The complex dynamics, bifurcations and chaos are displayed by computing numerically Lyapunov numbers and sensitive dependence on initial conditions.