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Nonatomic potential games: the continuous strategy case

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  • Cheung, Man-Wah
  • Lahkar, Ratul

Abstract

This paper studies large population (nonatomic) potential games with continuous strategy sets. We define such games as population games in which the payoff function is equal to the gradient of a real-valued function called the potential function. The Cournot competition model with continuous player set and continuous strategy set is our main example and is analyzed in detail. For general potential games, we establish that maximizers of potential functions are Nash equilibria. For a particular class of potential games called aggregative potential games, we characterize Nash equilibria using a one-dimensional analogue of the potential function, which we call the quasi-potential function. Finally, we show that a large population potential game is the limit of a sequence of finite-player potential games as the number of players approaches infinity.

Suggested Citation

  • Cheung, Man-Wah & Lahkar, Ratul, 2018. "Nonatomic potential games: the continuous strategy case," Games and Economic Behavior, Elsevier, vol. 108(C), pages 341-362.
  • Handle: RePEc:eee:gamebe:v:108:y:2018:i:c:p:341-362
    DOI: 10.1016/j.geb.2017.12.004
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:jetheo:v:181:y:2019:i:c:p:423-460 is not listed on IDEAS
    2. Osawa, Minoru & Akamatsu, Takashi, 2019. "Emergence of Urban Landscapes: Equilibrium Selection in a Model of Internal Structure of the Cities," MPRA Paper 92395, University Library of Munich, Germany.
    3. Takayama, Yuki, 2018. "Time-varying congestion tolling and urban spatial structure," MPRA Paper 89896, University Library of Munich, Germany.

    More about this item

    Keywords

    Potential games; Cournot competition model; Aggregative games; Externalities;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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