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

Author

Listed:
  • Engelbert J. Dockner

    (University of Vienna, Austria)

  • Florian O.O. Wagener

    (CeNDEF, Universiteit van Amsterdam)

Abstract

This discussion paper led to a publication in Economic Theory , 2014, 56(3), 585-625. 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 equilibria (MPNE) for these games. These conditions result in an auxiliary 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.

Suggested Citation

  • Engelbert J. Dockner & Florian O.O. Wagener, 2006. "Markov-Perfect Nash Equilibria in Models with a Single Capital Stock," Tinbergen Institute Discussion Papers 06-055/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20060055
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    More about this item

    Keywords

    Capital accumulation games; Markov equilibria; Resource games; Differential games;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery

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