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Economic Growth And Redistribution: Evidence From Dynamic Games

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  • James Robert E. Sampi Bravo

Abstract

This work is based on a differential game proposed by Kelvin Lancaster. The game between two agents called workers and capitalists is based on the accumulation and redistribution of benefits among social classes concluding that cooperative outcomes outperform non-cooperative. This approach determines the optimum solution in a centralized economy as a non-cooperative game and cooperative Pareto solutions forced by the social planner. We compare the model solution in a decentralized economy, where rates economic growth are converging to a steady state and obtain high rates of inflation, and higher levels of consumption. Alternatively, the cooperative solution found between agents can be confirmed. A capitalist game continues to monitor the cooperative principle, in which the maximum benefit is obtained through cooperation.

Suggested Citation

  • James Robert E. Sampi Bravo, 2012. "Economic Growth And Redistribution: Evidence From Dynamic Games," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 6(2), pages 23-40.
    • Handle: RePEc:ibf:gjbres:v:6:y:2012:i:2:p:23-40
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    References listed on IDEAS

    as
    1. Hoel, Michael, 1978. "Distribution and Growth as a Differential Game between Workers and Capitalists," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(2), pages 335-350, June.
    2. Pohjola, Matti, 1983. "Nash and stackelberg solutions in a differential game model of capitalism," Journal of Economic Dynamics and Control, Elsevier, vol. 6(1), pages 173-186, September.
    3. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June.
    4. de Zeeuw, Aart, 1992. "Note on 'Nash and Stackelberg solutions in a differential game model of capitalism'," Journal of Economic Dynamics and Control, Elsevier, vol. 16(1), pages 139-145, January.
    5. Seierstad, Atle, 1993. "The dynamic efficiency of capitalism," Journal of Economic Dynamics and Control, Elsevier, vol. 17(5-6), pages 877-886.
    6. Lancaster, Kelvin, 1973. "The Dynamic Inefficiency of Capitalism," Journal of Political Economy, University of Chicago Press, vol. 81(5), pages 1092-1109, Sept.-Oct.
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    More about this item

    Keywords

    Differential game; non-cooperative game and cooperative game;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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