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The Chaotic General Economic Equilibrium Model and Monopoly

Author(s): Vesna D. Jablanovic

Journal: Asian Journal of Business Management
ISSN 2041-8744

Volume: 4;
Issue: 4;
Start page: 373;
Date: 2012;
Original page

Keywords: Chaos | general equilibrium | monopoly | output

The basic aim of this study is to construct a relatively simple chaotic general economic equilibrium growth model that is capable of generating stable equilibrium, cycles, or chaos. An important example of general economic equilibrium is provided by monopolies. A key hypothesis of this study is based on the idea that the coefficient π = b mRS/m (α-1) (1+1/e) mRT plays a crucial role in explaining local stability of the general equilibrium output, where, b: The coefficient of the quadratic marginal-cost function, m: The coefficient of the inverse demand function, mRS: The marginal rate of substitution, mRT: Marginal rate of transformation, α: The coefficient of the monopoly price growth, e: The coefficient of the price elasticity of demand.

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