The robustness of a Nash equilibrium simulation model: Game-theoretic approach using variable metric projection method

This paper proposes a Nash equilibrium model that applies continuous time replicator dynamics to the analysis of oligopoly markets. The robustness of the proposed simple Nash equilibrium model under the simultaneous constraints of allocation of product and market share using a simulation method to derive an optimal solution for production decisions by rival firms in oligopoly markets is tested by changing profit and cost function parameters, as well as the initial production values and market shares of the firms examined in this study. The effects of differences in conjectural variation and initial allocation of market share on the convergent values are considered, particularly in the case of corner solutions. This approach facilitates the understanding of the robustness of attaining equilibrium in an oligopoly market. © 2010 IMACS. Published by Elsevier B.V. All rights reserved.