All symmetric equilibria in differential games with public goods

Niko Jaakkola and Florian Wagener

No 20-020/II, Tinbergen Institute Discussion Papers from Tinbergen Institute

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 re- sponses. We extend the theory of differential games to deal with payoffs under discontinuous strategies. Our methods work under general functional forms.

JEL-codes: C73 Q54 (search for similar items in EconPapers)
Date: 2020-04-20
New Economics Papers: this item is included in nep-gth, nep-mic and nep-ore
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https://papers.tinbergen.nl/20020.pdf (application/pdf)

Related works:
Working Paper: All Symmetric Equilibria in Differential Games with Public Goods (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20200020

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