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Complementarity, Substitutability And Strategic Accumulation Of Capital

Author

Listed:
  • CHARLES FIGUIERES

    (University of Bristol, Department of Economics, 8 Woodland Road, Bristol BS8 1TN, England)

Abstract

The preemptive role of capital is analyzed in a class of differential games of capital accumulation with reversible investment for two symmetric players. Two dynamic concepts of interaction are defined: feedback substitutability and feedback complementarity. These concepts are useful for exploring the dynamic properties of the stocks. In particular it is proved that if the equilibrium of the game is characterized by feedback substitutability, the firm with the higher initial condition overshoots his long-run level of capital.

Suggested Citation

  • Charles Figuieres, 2002. "Complementarity, Substitutability And Strategic Accumulation Of Capital," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 4(04), pages 371-390.
    • Handle: RePEc:wsi:igtrxx:v:04:y:2002:i:04:n:s0219198902000823
    DOI: 10.1142/S0219198902000823
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    Cited by:

    1. Changying Li & Jianhu Zhang, 2013. "Dynamic Games of R&D Competition in a Differentiated Duopoly," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 169(4), pages 660-679, December.

    More about this item

    Keywords

    Dynamic games of capital accumulation; Nash equilibrium; non-monotonicity; overshooting; JEL C73; JEL D92; JEL L16;
    All these keywords.

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • C0 - Mathematical and Quantitative Methods - - General
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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