Two-Aggregate Games: Demonstration Using a Production-Appropriation Model
Scandinavian Journal of Economics, Forthcoming
31 Pages Posted: 3 Nov 2010 Last revised: 29 Jan 2017
There are 2 versions of this paper
Two-Aggregate Games: Demonstration Using a Production-Appropriation Model
A New Approach to Solving Production-Appropriation Games with Many Heterogeneous Players
Date Written: January 29, 2017
Abstract
We expand the scope of the two-aggregate method by applying it to a situation where many heterogeneous players are free to contribute to both aggregates. Such situations naturally arise in various resource allocation problems. Hence our method is useful in many applications. A production-appropriation model is employed to illustrate how the problem of establishing the Nash equilibrium can be reduced from solving n > 2 best response functions in n unknowns to solving two consistency conditions in two unknowns. We then conduct a comparative static exercise that the conventional approach could not handle easily --- if at all --- to demonstrate the power of our method.
Keywords: noncooperative games, aggregate games, conflict, appropriation
JEL Classification: C72, D74
Suggested Citation: Suggested Citation