ECONOMIC AND MATHEMATICAL SIMULATION MODEL OF PRICE COMPETITION IN THE LIGHT AIRCRAFT MARKET UNDER THE DUOPOLY CONDITIONS

Abstract

The growing volume of light aircraft production at the domestic enterprises over the past two to three years indicates the increasing demand for this type of product and the government’s interest in the aircraft industry development. Despite the slow pace of development of small aircraft in Russia, domestic enterprises producing light aircraft, except for the domestic market, find their customers abroad, in the international market, where they have to face tough competition. The work deals with the study of the competitive interaction between light aircraft manufacturers in the market in the context of price competition in the case of a duopoly. Using special software, the authors formulated competitive interaction simulation models determining the trajectories of changes in the key economic parameters such as the best prices selected by market participants according to their target functions, production volume, earnings and profit gained as the result of competitive interaction. The authors formed a mathematical model of choosing the optimal price for the products in the static and dynamic versions by the participants of the light aircraft market. Based on the dynamic model using the Simulink (MATLAB) simulation environment for complex systems, the authors formed simulation models of the competitive interaction mechanism; developed the correlated simulation dynamic models of market interaction of light aircraft manufacturers considered many factors inherent in actual market conditions and specificity of the light aircraft industry. The work includes the numerical experiment to determine the influence of cost price value on the prices for produced goods, the demand for these products, and the results gained by the market participants.