Complexity and Application of Tobacco Manufacturer Pricing Game considering Market Segments

This paper considers price as a strategy using two methods of market segmentation through game theory based on the collected data of several typical cities in Shandong province. Three oligarchs are discussed to analyze the complexity of the market in tobacco system. The effect of different factors on the equilibrium price of Nash equilibrium is discussed. What is more, the variation of parameters drives the system to change to uncertain status, even to bifurcation or chaos. We also discuss the model under normal circumstances, when the three parties jointly take chaos control measures, and its impact on the system. Finally, we clarify chaos control of economic significance. The results indicate that only reasonable pricing strategy is a critical point to achieve maximized profit and maintain orderly operation at the same time, which is a constructive suggestion for tobacco companies' operational strategy.

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