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Leader and Follower: A Differential Game Model

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  • Hassan Benchekroun
  • Ngo Van Long

    ()

Abstract

We consider a differential game between two players, where one player has the first mover advantage. We compare the equilibrium strategy profile of this model with the one generated by a conventional symmetric model. It is shown that the existence of a first mover results in more conservationist exploitation in the aggregate. We also consider the implication of departures from the equilibrium. We show that if the leader (the first mover) can commit to decrease its effort over a finite interval of time, then the follower (the second mover) may respond by increasing, or decreasing, its effort, depending on the length of the commitment period. On analyse un jeu différentiel entre deux joueurs, dont le premier a l'avantage de prendre sa décision avant son adversaire. On compare le profil de stratégies d'équilibre de ce modèle avec celui d'un modèle d'actions symétriques. On démontre que l'existence d'un leader favorise la conservation dans l'exploitation du stock commun. On analyse les déviations possibles à partir d'un équilibre. On démontre que si le leader peux s'engager à une politique d'exploitation plus modérée, alors le suiveur peux répondre plus ou moins agressivement, selon la durée de la période d'engagement.

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Bibliographic Info

Paper provided by CIRANO in its series CIRANO Working Papers with number 2001s-08.

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Date of creation: 01 Feb 2001
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Handle: RePEc:cir:cirwor:2001s-08

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Related research

Keywords: Leadership; differential games; Leadership; jeux différentiels;

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References

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  1. Crabbe, P. & Long, N.V., 1988. "Entry Deterrence And Overexploitation Of The Fishery," Working Papers 8804, University of Ottawa, Department of Economics.
  2. Bolle, Friedel, 1986. "On the Oligopolistic Extraction of Non-renewable Common-Pool Resources," Economica, London School of Economics and Political Science, vol. 53(212), pages 519-27, November.
  3. Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329, October.
  4. Léonard,Daniel & Long,Ngo van, 1992. "Optimal Control Theory and Static Optimization in Economics," Cambridge Books, Cambridge University Press, number 9780521331586, October.
  5. Kathleen A. Miller, 1996. "Salmon Stock Variability And The Political Economy Of The Pacific Salmon Treaty," Contemporary Economic Policy, Western Economic Association International, vol. 14(3), pages 112-129, 07.
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  7. Kemp, Murray C & Long, Ngo Van, 1983. "On the Economics of Forests," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(1), pages 113-31, February.
  8. Chiarella, Carl, et al, 1984. "On the Economics of International Fisheries," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(1), pages 85-92, February.
  9. Paul C. Missios & Charles Plourde, 1996. "The Canada-European Union Turbot War: A Brief Game Theoretic Analysis," Canadian Public Policy, University of Toronto Press, vol. 22(2), pages 144-150, June.
  10. Plourde, C G, 1970. "A Simple Model of Replenishable Natural Resource Exploitation," American Economic Review, American Economic Association, vol. 60(3), pages 518-22, June.
  11. Sinn, Hans-Werner, 1984. "Common Property Resources, Storage Facilities and Ownership Structures: A Cournot Model of the Oil Market," Economica, London School of Economics and Political Science, vol. 51(23), pages 235-52, August.
  12. Datta, M. & Mirman, L., 1994. "Dynamic Capital Interactions, Externalities and Trade," CORE Discussion Papers 1994009, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  13. Fischer, Ronald D. & Mirman, Leonard J., 1992. "Strategic dynamic interaction : Fish wars," Journal of Economic Dynamics and Control, Elsevier, vol. 16(2), pages 267-287, April.
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