Strategic Behavior under Intertemporal Production Externalities

Richard Cornes, Ngo Long and Koji Shimomura

CIRANO Working Papers from CIRANO

Abstract: We model the non-cooperative choice of levels of inputs whose current usage results in the future decline in their effectiveness. We show that there are multiple equilibria that are Pareto rankable. Compared with the social optimum, lack of cooperation implies excessive use of input, leading to excessively rapid rates of decline in effectiveness. The harm is more pronounced when firms use Markov perfect strategies, as compared with open-loop strategies. Nous modélisons le jeu de choix optimal d'un input dont l'usage diminue l'efficacité dans le futur. Nous démontrons qu'il y a des équilibres multiples que l'on peut comparer en utilisant le critère de supériorité à la Pareto. La perte d'efficacité est plus grave si les firmes adoptent des stratégies markoviennes au lieu des stratégies à boucle ouverte.

Keywords: Dynamic games; externalities; Jeux dynamiques; externalités (search for similar items in EconPapers)
JEL-codes: C73 (search for similar items in EconPapers)
Date: 2000-02-01
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Persistent link: https://EconPapers.repec.org/RePEc:cir:cirwor:2000s-07

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