Routes to complexity induced by constraints in Cournot oligopoly games with linear reaction functions

Within a classical discrete-time Cournot oligopoly model with linear demand and quadratic cost functions, minimum and maximum production constraints are imposed in order to explore their effects on the dynamic of the system. Due to the presence of such constraints, the dynamic model assumes the form of a continuous piecewise linear map of the plane. The study of Nash equilibria of the oligopoly game, together with an analytical and numerical investigation of the different kinds of attractors of the dynamical system, shows how the presence of production constraints generates so called border collision bifurcations, a kind of global bifurcations recently introduced in the literature on non-smooth dynamical systems, which gives rise to a quite rich spectrum of dynamic scenarios, characterized by drastic changes in the qualitative dynamic properties of the system.