IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Markov Perfect Equilibria in Differential Games with Regime Switching Strategies

  • Ngo Van Long
  • Fabien Prieur
  • Klarizze Puzon
  • Mabel Tidball

We propose a new methodology exploring Markov perfect equilibrium strategies in differential games with regime switching. Specifically, we develop a general game with two players having two kinds of strategies. Players choose an action that inuences the evolution of a state variable, and decide on the switching time from one regime to another. Compared to the optimal control problem with regime switching, necessary optimaliity conditions are modified for the first-mover. When choosing her optimal switching strategy, this player considers the impact of her choice on the other player's actions and payoffs. In order to determine the equilibrium timing of regime changes, the notion of wrong timing is introduced and necessary conditions for a particular timing to be wrong are derived.[...]

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
File Function: Revised version, 2014
Download Restriction: no

Paper provided by LAMETA, Universtiy of Montpellier in its series Working Papers with number 13-06.

in new window

Length: 30 pages
Date of creation: Mar 2013
Date of revision: Jan 2014
Handle: RePEc:lam:wpaper:13-06
Contact details of provider: Postal: Avenue Raymond Dugrand, CS 79606, 34960 Montpellier Cedex 2
Phone: +33-467-158-568
Fax: +33-467-158-467
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Fabien Prieur & Mabel Tidball & Cees Withagen, 2012. "Optimal Emission-Extraction Policy in a World of Scarcity and Irreversibility," OxCarre Working Papers 077, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  2. Alvarez-Cuadrado, Francisco & Van Long, Ngo, 2011. "Relative consumption and renewable resource extraction under alternative property-rights regimes," Resource and Energy Economics, Elsevier, vol. 33(4), pages 1028-1053.
  3. Rick van der Ploeg & Dominic Rohner, 2010. "War and Natural Resource Exploitation," OxCarre Working Papers 042, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  4. Valente, Simone, 2011. "Endogenous Growth, Backstop Technology Adoption, And Optimal Jumps," Macroeconomic Dynamics, Cambridge University Press, vol. 15(03), pages 293-325, June.
  5. BOUCEKKINE, RAOUF & SAGLAM , Cagri & VALLÉE, Thomas, 2003. "Technology adoption under embodiment: a two-stage optimal control approach," CORE Discussion Papers 2003055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Daron Acemoglu & James A. Robinson, 2006. "Persistence of Power, Elites and Institutions," NBER Working Papers 12108, National Bureau of Economic Research, Inc.
  7. Tornell, Aaron, 1997. " Economic Growth and Decline with Endogenous Property Rights," Journal of Economic Growth, Springer, vol. 2(3), pages 219-50, September.
  8. Raouf Boucekkine & Aude Pommeret & Fabien Prieur, 2012. "Optimal Regime Switching and Threshold Effects. Theory and Application to a Resource Extraction Problem under Irreversibility," AMSE Working Papers 1213, Aix-Marseille School of Economics, Marseille, France.
  9. Makris, Miltiadis, 2001. "Necessary conditions for infinite-horizon discounted two-stage optimal control problems," Journal of Economic Dynamics and Control, Elsevier, vol. 25(12), pages 1935-1950, December.
  10. Boucekkine, R. & Pommeret, A. & Prieur, F., 2013. "Optimal regime switching and threshold effects," Journal of Economic Dynamics and Control, Elsevier, vol. 37(12), pages 2979-2997.
  11. Fudenberg, Drew & Tirole, Jean, 1985. "Preemption and Rent Equilization in the Adoption of New Technology," Review of Economic Studies, Wiley Blackwell, vol. 52(3), pages 383-401, July.
  12. repec:cor:louvrp:-2335 is not listed on IDEAS
  13. Ngo Long, 2011. "Dynamic Games in the Economics of Natural Resources: A Survey," Dynamic Games and Applications, Springer, vol. 1(1), pages 115-148, March.
  14. Tomiyama, Ken, 1985. "Two-stage optimal control problems and optimality conditions," Journal of Economic Dynamics and Control, Elsevier, vol. 9(3), pages 317-337, November.
  15. Raouf Boucekkine & Aude Pommeret & Fabien Prieur, 2013. "Technological vs. Ecological Switch and the Environmental Kuznets Curve," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(2), pages 252-260.
  16. BOUCEKKINE, Raouf & KRAWCZYK, Jacek B. & VALLEE, Thomas, . "Environmental quality versus economic performance: a dynamic game approach," CORE Discussion Papers RP 2335, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  17. Frederick van der Ploeg, 2008. "Voracious Transformation of a Common Natural Resource into Productive Capital," OxCarre Working Papers 002, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  18. Reinganum, Jennifer F, 1981. "On the Diffusion of New Technology: A Game Theoretic Approach," Review of Economic Studies, Wiley Blackwell, vol. 48(3), pages 395-405, July.
  19. repec:cup:cbooks:9780521855266 is not listed on IDEAS
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:lam:wpaper:13-06. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Patricia Modat)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.