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How nonlinear duopoly is related with mathematics?
Can you give me an example of how game theory is applied in nonlinear duopoly?
Sure! Let's say there are two companies, A and B, producing the same product. The demand function for the product is non-linear, meaning that the demand for the product changes based on the price. Company A decides to set a high price, expecting that Company B will also set a high price. However, if Company B decides to set a low price instead, they will gain more market share and Company A's revenue will decrease. Game theory can help both companies determine the best price to set based on their competitor's behavior.