All Symmetric Equilibria in Differential Games with Public Goods

Niko Jaakkola, Florian Wagener and Florian O.O. Wagener
Authors registered in the RePEc Author Service: Florian Oskar Ottokar Wagener

No 8246, CESifo Working Paper Series from CESifo

Abstract: We characterise the entire set of symmetric stationary Markov-perfect Nash equilibria (MPE) in a differential game of public good investment, using the canonical problem of climate change as an example. We provide a sufficient and necessary condition for MPE and show how the entire set of MPE is constructed. The equilibrium in continuous strategies, unique in our context, is Pareto-dominated by any other equilibrium. If a Pareto-undominated steady state exists, it is sustained by trigger-like strategies, with deviations above and below the steady state leading to different responses. We extend the theory of differential games to deal with payoffs under discontinuous strategies. Our methods work under general functional forms.

Keywords: differential games; Markov-perfect Nash equilibrium; dynamic investment games; dynamic public goods; climate change (search for similar items in EconPapers)
JEL-codes: C61 C73 D90 Q54 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-env, nep-gth, nep-mic and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: All symmetric equilibria in differential games with public goods (2020)
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