On the Feedback Solution of a Differential Oligopoly Game with Capacity Adjustment
Quaderni DSE Working Paper No. 741
26 Pages Posted: 26 Mar 2011
Date Written: March 14, 2011
Abstract
We propose a simple method for characterising analytically the feedback solution of oligopoly games with capital accumulation à la Solow-Swan. As a result, it becomes possible to contrast the feedback equilibrium against the corresponding one generated by open-loop information. Our method accommodates extensions of the stripped down oligopoly model in several directions. As an example, we expand the setup to include environmental effects and Pigouvian taxation.
Keywords: capacity, differential game, feedback equilibrium, Hamilton-Jacobi-Bellman equation
JEL Classification: C73, L13, Q55
Suggested Citation: Suggested Citation