On the Coincidence of the Feedback Nash and Stackelberg Equilibria in Economic Applications of Differential Games

Santiago Rubio

No E2003/40, Economic Working Papers at Centro de Estudios Andaluces from Centro de Estudios Andaluces

Abstract: In this paper the scope of the applicability of the Stackelberg equilibrium concept in differential games is investigated. Firstly, conditions for obtaining the coincidence between the Stackelberg and Nash equilibria are defined in terms of the instantaneous pay-off function and the state equation of the game. Secondly, it is showed that for a class of differential games with state-interdependence both equilibria are identical independently of the player being the leader of the game. A survey of different economic models shows that this coincidence is going to occur for a good number of economic applications of differential games. This result appears because of the continuous-time setting in which differential games are defined. In this setting the first movement advantage of the leader may disappear and the both equilibria coincide.

Keywords: Differential games; stationary feedback Nash equilibrium; stationary feedback Stackelberg equilibrium. (search for similar items in EconPapers)
JEL-codes: C73 D62 H41 Q20 Q30 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2003
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Related works:
Working Paper: ON THE COINCIDENCE OF THE FEEDBACK NASH AND STACKELBERG EQUILIBRIA IN ECONOMIC APPLICATIONS OF DIFFERENTIAL GAMES (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:cea:doctra:e2003_40

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