Complex dynamics analysis and chaos control in airlines´ dynamic price competition model with bounded retionality in China

To investigate the complex dynamics and chaos control in airlines´ price competition, the dynamic price competition model of airlines with duopoly is established by using the theory of bifurcation of dynamical systems, and the existence and stability of equilibrium points of this model are discussed. The complex dynamics of this model in different market parameters are shown though numerical simulation. The simulation results show that the speed of price adjustment has an obvious impact on the stability of model. Compared with the equilibrium average profits, all airlines´ average profits are decreased obviously when chaos is occurred. The dynamic price competition model of airlines can return to stable state from chaotic state by delayed feedback chaos control method while suitable controlling factor is chosen. The analysis and results in this paper are interesting in mathematics and economics.