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On The Coincidence Of The Feedback Nash And Stackelberg Equilibria In Economic Applications Of Differential Games

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  • Santiago J. Rubio

    ()
    (Universitat de València)

Abstract

In this paper the scope of the applicability of the Stackelberg equilibrium concept in differential games is investigated. Firstly, it is showed that for a class of differential games with state-interdependence the stationary feedback Nash equilibrium coincides with the stationary feedback Stackelberg equilibrium independently of the player being the leader of the game. Secondly, sufficient conditions for obtaining the coincidence between the two equilibria are defined. A review 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 disappears and then both equilibria coincide.

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File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2002-11.pdf
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Bibliographic Info

Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2002-11.

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Length: 40 pages
Date of creation: Jul 2002
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2002-11

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Keywords: Differential Games; Stationary Feedback Nash Equilibrium; Stationary Feedback Stackelberg Equilibrium; Coincidence.;

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Cited by:
  1. Karray, Salma & Martín-Herrán, Guiomar, 2009. "A dynamic model for advertising and pricing competition between national and store brands," European Journal of Operational Research, Elsevier, vol. 193(2), pages 451-467, March.

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