COMPLEMENTARITY, SUBSTITUTABILITY AND STRATEGIC ACCUMULATION OF CAPITAL

Charles Figuieres

International Game Theory Review (IGTR), 2002, vol. 04, issue 04, 371-390

Abstract: The preemptive role of capital is analyzed in a class of differential games of capital accumulation with reversible investment for two symmetric players. Two dynamic concepts of interaction are defined: feedback substitutability and feedback complementarity. These concepts are useful for exploring the dynamic properties of the stocks. In particular it is proved that if the equilibrium of the game is characterized by feedback substitutability, the firm with the higher initial condition overshoots his long-run level of capital.

Keywords: Dynamic games of capital accumulation; Nash equilibrium; non-monotonicity; overshooting; JEL C73; JEL D92; JEL L16 (search for similar items in EconPapers)
JEL-codes: B4 C0 C6 C7 D5 D7 M2 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (1)

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DOI: 10.1142/S0219198902000823

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