Economics and Finance


On Complex Dynamics of Regional Interaction

Authors: Georges Sarafopoulos

In this paper we consider the interaction between regions during the implementation of a reform on regional development through a discrete – time duopoly game with heterogeneous players. The existence and stability of equilibria of this system are studied. We show that a parameter of the system may change the stability of equilibrium and cause a structure to behave chaotically. For the low values of this parameter the game has a stable Nash equilibrium. Increasing these values, the Nash equilibrium becomes unstable, through period-doubling bifurcation. The complex dynamics, bifurcations and chaos are displayed by computing numerically Lyapunov numbers and sensitive dependence on initial conditions. Keywords: Regional Development, Institutional Reforms of Local Governments, Game Theory, Nash Equilibrium, Discrete Dynamical System; Chaotic Behavior. JEL Classification: C61, C72, R11

Comments: 11 Pages.

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Submission history

[v1] 2018-07-03 23:36:09

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