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A note on the coincidence between Stackelberg and Nash equilibria in a differential game between government and firms


  • Jesus Marin-Solano
  • Jorge Navas

    (Universitat de Barcelona)


In Navas and Mar n-Solano (2008) the coincidence between Nash and Stackelberg equilibria for a modified version of the differential game model first proposed by Lancaster (1973) was proved. However, important restrictions on the value of the parameters of the model were included, in order to obtain an interior solution. In this paper we extend the previous result, in the limit when the discount rate is equal to zero, by eliminating the restrictions and taking into account corner solutions.

Suggested Citation

  • Jesus Marin-Solano & Jorge Navas, 2009. "A note on the coincidence between Stackelberg and Nash equilibria in a differential game between government and firms," Working Papers in Economics 214, Universitat de Barcelona. Espai de Recerca en Economia.
  • Handle: RePEc:bar:bedcje:2009214

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    References listed on IDEAS

    1. Gradus, R.H.J.M., 1988. "A differential game between government and firms : : A non-cooperative approach," Research Memorandum 0ad210a1-660c-4e14-93f1-8, Tilburg University, School of Economics and Management.
    2. Jorge Navas & Jesús Marín-Solano, 2008. "Interactions between government and firms: a differential game approach," Annals of Operations Research, Springer, vol. 158(1), pages 47-61, February.
    3. Pohjola, Matti, 1983. "Nash and stackelberg solutions in a differential game model of capitalism," Journal of Economic Dynamics and Control, Elsevier, vol. 6(1), pages 173-186, September.
    4. de Zeeuw, Aart, 1992. "Note on 'Nash and Stackelberg solutions in a differential game model of capitalism'," Journal of Economic Dynamics and Control, Elsevier, vol. 16(1), pages 139-145, January.
    5. Lancaster, Kelvin, 1973. "The Dynamic Inefficiency of Capitalism," Journal of Political Economy, University of Chicago Press, vol. 81(5), pages 1092-1109, Sept.-Oct.
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    JEL classification:

    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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