Quantum Model of Bertrand Duopoly

Salman Khan, M. Ramzan and M. K. Khan

Abstract: We present the quantum model of Bertrand duopoly and study the entanglement behavior on the profit functions of the firms. Using the concept of optimal response of each firm to the price of the opponent, we found only one Nash equilibirum point for maximally entangled initial state. The very presence of quantum entanglement in the initial state gives payoffs higher to the firms than the classical payoffs at the Nash equilibrium. As a result the dilemma like situation in the classical game is resolved.

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Date: 2010-01, Revised 2010-10
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Published in Chin. Phys. Lett. Vol. 27, No. 8 (2010) 080302

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