Asymmetric Information in a Capital Accumulation Differential Game with Spillover and Learning Effects

Gustav Feichtinger, Richard F. Hartl (), Peter Kort, Andrea Seidl () and Stefan Wrzaczek ()
Additional contact information
Richard F. Hartl: University of Vienna
Andrea Seidl: University of Vienna
Stefan Wrzaczek: International Institute for Applied Systems Analysis (IIASA)

Journal of Optimization Theory and Applications, 2022, vol. 194, issue 3, No 6, 878-895

Abstract: Abstract This paper considers a capital accumulation game where the installation costs of investments are lowered by the firm’s own capital stock because of learning and by the competitor’s capital stock because of spillover effects. To properly understand the impact of the two capital stocks, we consider six information structures which differ in whether a firm takes into account that their competitor’s strategy depends only on time or on one or both capital stocks. We find that if firms are aware that their own capital stock makes investments of the competitor more efficient, a firm would invest less. Due to this effect, information only pays off if it is taken into account by both competitors, because otherwise the less informed and therefore less cautious player invests more and has a higher capital stock and revenues in the long run.

Keywords: Capital accumulation; Differential Game; Open-loop; Closed-loop; Spillover effects; 49N70; 91A23; 91A80; 91B44; 91B55 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10957-022-02054-7 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joptap:v:194:y:2022:i:3:d:10.1007_s10957-022-02054-7

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10957/PS2

DOI: 10.1007/s10957-022-02054-7

Access Statistics for this article

Journal of Optimization Theory and Applications is currently edited by Franco Giannessi and David G. Hull

More articles in Journal of Optimization Theory and Applications from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().