Complementarity, Substituability and Capital Accumulation

Charles Figuieres

G.R.E.Q.A.M. from Universite Aix-Marseille III

Abstract: The preemptive role of capital is analysed in a class of two-player symmetric capital accumulation differential games with reversible investment. It is proved that, in the medium run, the firm with better initial condition exploits its advantage when the game features feedback substituability. Indeed the feedback as well as the open loop Nash equilibria yield an overshooting with respect to the long run steady state for the capital stock of the advantaged firm.

Keywords: GAMES; NASH EQUILIBRIUM; CAPITAL (search for similar items in EconPapers)
JEL-codes: C73 D92 L16 (search for similar items in EconPapers)
Pages: 20 pages
Date: 1998
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:fth:aixmeq:98a31

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