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Robust Policy Schemes for Differential R&D Games with Asymmetric Information

Anton Bondarev ()

Dynamic Games and Applications, 2019, vol. 9, issue 2, 391-415

Abstract: Abstract I consider a general differential R&D game with finite set of firms which may generate a multiplicity of strategically driven outcomes like prevention of entry or strategic delay. It is assumed that while interacting firms are fully aware of their potentials, the government is uncertain over the true state of the industry and thus may be unable to predict such strategic behavior. The choice function over the set of potential outcomes is defined, and robust welfare optimal and individually optimal regimes are compared. The belief of the planner over the market shapes the set of potential policy schemes. The ordering of such schemes with respect to uncertainty, costs and welfare-improving potential is established. At last, the optimal level of robustness for a given policy is found.

Keywords: Axiom of choice; Strategic interaction; Robust policy sets; Welfare ordering; Optimal robustness (search for similar items in EconPapers)
JEL-codes: C02 C61 O31 O38 (search for similar items in EconPapers)
Date: 2019
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