Turnpike Properties in a Finite-Horizon Differential Game: Dynamic Duopoly with Sticky Prices

Chaim Fershtman () and Morton I Kamien

International Economic Review, 1990, vol. 31, issue 1, 49-60

Abstract: The authors study the equilibrium price paths of a finite-horizon dynamic duopoly model in which the market price does not have to adjust instantaneously in response to changes in the quantity supplied. A complete analysis of the feedback Nash equilibrium of a finite-horizon linear quadratic differential game with a control constraint is presented. Two equilibrium price paths are identified and it is shown that they both remain close to the infinite-horizon, globally asymptotically stable, stationary equilibrium except for some initial and final time. Copyright 1990 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1990
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Related works:
Working Paper: TURNPIKE PROPERTIES IN A FINITE HORIZON DIFFERENTIAL GAME: DYNAMIC DUOPOLY WITH STICKY PRICES (1988)
Working Paper: Turnpike Properties in a Finite Horizon Differential Game: Dynamic Duopoly with Sticky Prices (1987)
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