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Markov-Perfect Nash Equilibria in Models With a Single Capital Stock

  • Dockner, E.J.

    (University of Vienna)

  • Wagener, F.O.O.

    ()

    (Universiteit van Amsterdam)

Many economic problems can be formulated as dynamic games in which strategically interacting agents choose actions that determine the current and future levels of a single capital stock. We study necessary conditions that allow us to characterize Markov perfect Nash equalibria (MPNE) for these games. These conditions result in an auxilary system of ordinary differential equations that helps us to explore stability, continuity and differentiability of MPNE. The techniques are used to derive detailed properties of MPNE for several games including the exploitation of a finite resource, the voluntary investment in a public capital stock, and the inter-temporal consumption of a reproductive asset.

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Paper provided by Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance in its series CeNDEF Working Papers with number 06-07.

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Date of creation: 2006
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Handle: RePEc:ams:ndfwpp:06-07
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