One of the Indonesian government efforts to recover Indonesian economy is the issuance of the act number 5 year 1999 regulating monopoly prohibition practice and unfair competition. The problem is why the act is issued, how it is applied, and what difficulties are found in accomplishing the act. (end).
This paper is based on the assumption that efforts which include innovation, cost on production and efficiency affect market share in duopoly game. We develop a model and simulation for two combinations of how firms decide their capacity of production based on bounded rationality and adaptive expectations which in turn lead to a pair of firm's strategies: Homogeneous and heterogeneous. If some …