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On the Coincidence of the Feedback Nash and Stackelberg Equilibria in Economic Applications of Differential Games

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Author Info
Santiago J. Rubio () (Universidad de Valencia)

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Abstract

In this paper the scope of the applicability of the Stackelberg equilibrium concept in differential games is investigated. Firstly, conditions for obtaining the coincidence between the Stackelberg and Nash equilibria are defined in terms of the instantaneous pay-off function and the state equation of the game. Secondly, it is showed that for a class of differential games with state-interdependence both equilibria are identical independently of the player being the leader of the game. A survey of different economic models shows that this coincidence is going to occur for a good number of economic applications of differential games. This result appears because of the continuous-time setting in which differential games are defined. In this setting the first movement advantage of the leader may disappear and the both equilibria coincide.

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Paper provided by Centro de Estudios Andaluces in its series Economic Working Papers at Centro de Estudios Andaluces with number E2003/40.

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Length: 34 pages
Date of creation: 2003
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Handle: RePEc:cea:doctra:e2003_40

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Related research
Keywords: Differential games; stationary feedback Nash equilibrium; stationary feedback Stackelberg equilibrium.;

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Find related papers by JEL classification:
C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
D62 - Microeconomics - - Welfare Economics - - - Externalities
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General

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