Dynamic game model of endogenous growth with consumption externalities
AbstractThis paper introduces consumption externalities into an endogenous growth model of common capital accumulation and characterizes balanced growth equilibria. Contrary to the standard argument in previous studies, we show that the growth rate in a feedback Nash equilibrium can be higher than that in an open-loop Nash equilibrium if agents strongly admire the consumption of others. This result is irrelevant to whether preferences exhibit "keeping up with the Joneses" or "running away from the Joneses".
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 49314.
Date of creation: 29 Sep 2009
Date of revision:
Publication status: Published in Journal of Optimization Theory and Applications 1.145(2010): pp. 93-107
Differential game; Consumption externalities; Endogenous growth; Open-loop Nash equilibrium; Feedback Nash equilibrium;
Other versions of this item:
- Katsuhiko Hori & Akihisa Shibata, 2008. "A Dynamic Game Model of Endogenous Growth with Consumption Externalities," Keio/Kyoto Joint Global COE Discussion Paper Series 2008-040, Keio/Kyoto Joint Global COE Program.
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- O44 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
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