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Leader and Follower: A Differential Game Model

  • Hassan Benchekroun
  • Ngo Van Long

We consider a differential game between two players, where one player has the first mover advantage. We compare the equilibrium strategy profile of this model with the one generated by a conventional symmetric model. It is shown that the existence of a first mover results in more conservationist exploitation in the aggregate. We also consider the implication of departures from the equilibrium. We show that if the leader (the first mover) can commit to decrease its effort over a finite interval of time, then the follower (the second mover) may respond by increasing, or decreasing, its effort, depending on the length of the commitment period. On analyse un jeu différentiel entre deux joueurs, dont le premier a l'avantage de prendre sa décision avant son adversaire. On compare le profil de stratégies d'équilibre de ce modèle avec celui d'un modèle d'actions symétriques. On démontre que l'existence d'un leader favorise la conservation dans l'exploitation du stock commun. On analyse les déviations possibles à partir d'un équilibre. On démontre que si le leader peux s'engager à une politique d'exploitation plus modérée, alors le suiveur peux répondre plus ou moins agressivement, selon la durée de la période d'engagement.

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Paper provided by CIRANO in its series CIRANO Working Papers with number 2001s-08.

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Length: 24 pages
Date of creation: 01 Feb 2001
Date of revision:
Handle: RePEc:cir:cirwor:2001s-08
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  11. Bolle, Friedel, 1986. "On the Oligopolistic Extraction of Non-renewable Common-Pool Resources," Economica, London School of Economics and Political Science, vol. 53(212), pages 519-27, November.
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