Chaotic dynamics in three dimensions: a topological proof for a triopoly game model

Abstract

We rigorously prove the existence of chaotic dynamics for the triopoly game model already studied, mainly from a numerical viewpoint, in the working paper by Naimzada and Tramontana [2011]. In the model considered, the three firms are heterogeneous and in fact each of them adopts a different decisional mechanism, i.e., linear approximation, best response and gradient mechanisms, respectively. The method we employ is the so-called "Stretching Along the Paths" (SAP) technique in Pireddu and Zanolin [2007], based on the Poincar\'e-Miranda Theorem and on the properties of the cutting surfaces.