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Influence of price elasticity of demand on monopoly games under different returns to scale

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Influence of price elasticity of demand on monopoly games under different returns to scale. / Li, Xiaoliang; Yang, Jing ; Zhang, Ally Quan.
In: Mathematics and Computers in Simulation, Vol. 233, 31.07.2025, p. 75-98.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Li, X, Yang, J & Zhang, AQ 2025, 'Influence of price elasticity of demand on monopoly games under different returns to scale', Mathematics and Computers in Simulation, vol. 233, pp. 75-98. https://doi.org/10.1016/j.matcom.2025.01.017

APA

Li, X., Yang, J., & Zhang, A. Q. (2025). Influence of price elasticity of demand on monopoly games under different returns to scale. Mathematics and Computers in Simulation, 233, 75-98. Advance online publication. https://doi.org/10.1016/j.matcom.2025.01.017

Vancouver

Li X, Yang J, Zhang AQ. Influence of price elasticity of demand on monopoly games under different returns to scale. Mathematics and Computers in Simulation. 2025 Jul 31;233:75-98. Epub 2025 Feb 3. doi: 10.1016/j.matcom.2025.01.017

Author

Li, Xiaoliang ; Yang, Jing ; Zhang, Ally Quan. / Influence of price elasticity of demand on monopoly games under different returns to scale. In: Mathematics and Computers in Simulation. 2025 ; Vol. 233. pp. 75-98.

Bibtex

@article{73749905803d48ffbb441f72caf77495,
title = "Influence of price elasticity of demand on monopoly games under different returns to scale",
abstract = "This paper examines a monopoly market featured by a general isoelastic demand function. Assuming that the monopolist's cost function is quadratic, we investigate the influence of the price elasticity of demand on the behavior of monopoly games under various (decreasing, constant, and increasing) returns to scale. Note that the assumption of a general isoelastic demand function and a quadratic cost function results in the equilibrium equation becoming transcendental, which makes the closed-form solutions unattainable. To overcome this obstacle, we adopt an innovative approach that utilizes the special structure of the marginal revenue and the marginal cost to conduct the comparative static analysis and the stability analysis. This paper also introduces two boundedly rational dynamic models based on different (gradient and LMA) mechanisms of adjusting the output. Our findings reveal that the LMA model is more stable in both the parameter space and the state space than the gradient model. In particular, it is proved that the unique non-vanishing equilibrium of the LMA model is globally asymptotically stable.",
author = "Xiaoliang Li and Jing Yang and Zhang, {Ally Quan}",
year = "2025",
month = feb,
day = "3",
doi = "10.1016/j.matcom.2025.01.017",
language = "English",
volume = "233",
pages = "75--98",
journal = "Mathematics and Computers in Simulation",
issn = "0378-4754",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - Influence of price elasticity of demand on monopoly games under different returns to scale

AU - Li, Xiaoliang

AU - Yang, Jing

AU - Zhang, Ally Quan

PY - 2025/2/3

Y1 - 2025/2/3

N2 - This paper examines a monopoly market featured by a general isoelastic demand function. Assuming that the monopolist's cost function is quadratic, we investigate the influence of the price elasticity of demand on the behavior of monopoly games under various (decreasing, constant, and increasing) returns to scale. Note that the assumption of a general isoelastic demand function and a quadratic cost function results in the equilibrium equation becoming transcendental, which makes the closed-form solutions unattainable. To overcome this obstacle, we adopt an innovative approach that utilizes the special structure of the marginal revenue and the marginal cost to conduct the comparative static analysis and the stability analysis. This paper also introduces two boundedly rational dynamic models based on different (gradient and LMA) mechanisms of adjusting the output. Our findings reveal that the LMA model is more stable in both the parameter space and the state space than the gradient model. In particular, it is proved that the unique non-vanishing equilibrium of the LMA model is globally asymptotically stable.

AB - This paper examines a monopoly market featured by a general isoelastic demand function. Assuming that the monopolist's cost function is quadratic, we investigate the influence of the price elasticity of demand on the behavior of monopoly games under various (decreasing, constant, and increasing) returns to scale. Note that the assumption of a general isoelastic demand function and a quadratic cost function results in the equilibrium equation becoming transcendental, which makes the closed-form solutions unattainable. To overcome this obstacle, we adopt an innovative approach that utilizes the special structure of the marginal revenue and the marginal cost to conduct the comparative static analysis and the stability analysis. This paper also introduces two boundedly rational dynamic models based on different (gradient and LMA) mechanisms of adjusting the output. Our findings reveal that the LMA model is more stable in both the parameter space and the state space than the gradient model. In particular, it is proved that the unique non-vanishing equilibrium of the LMA model is globally asymptotically stable.

U2 - 10.1016/j.matcom.2025.01.017

DO - 10.1016/j.matcom.2025.01.017

M3 - Journal article

VL - 233

SP - 75

EP - 98

JO - Mathematics and Computers in Simulation

JF - Mathematics and Computers in Simulation

SN - 0378-4754

ER -