On the Stability and Multistability in a Duopoly Game with R&D Spillover and Price Competition

Abstract

In this paper, a dynamical two-stage game with R&D competition and joint profit maximization is built. The stability of all the equilibrium points is discussed through Jury condition, and the stability region of the Nash equilibrium point is then given. The influence of the parameters on the system is discussed, and we find that the firm can even benefit from chaos, when it has higher innovation efficiency and higher adjusting speed. And then the coexistence of multiple attractors is studied using basin of attraction. Our research result shows that the coexisting attractors can be observed in the two-parameter bifurcation diagram. At last, the boundary of feasible region, global bifurcations, and formation mechanism of fractal structure of attracting basin are analyzed through critical curves and noninvertible map theory.