Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
884804 | Journal of Economic Behavior & Organization | 2006 | 15 Pages |
Abstract
This study sheds light on statistical properties of chaotic economic dynamics. To this end, it builds a simple Cournot dynamic model with two firms in which reactions functions are non-linear and goods are complements. When non-linearities get strong enough, the output adjustment process generates complex dynamics involving chaos. It is analytically as well as numerically demonstrated that for both firms, a long-run average profit taken along a chaotic trajectory can be higher than a profit taken at a stationary point. This result implies that chaotic dynamics can be beneficial from the long-run point of view.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Akio Matsumoto, Yasuo Nonaka,