Optimal switching from competition to cooperation: a preliminary exploration

Raouf Boucekkine (), Carmen Camacho () and Benteng Zou
Additional contact information
Carmen Camacho: PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

Post-Print from HAL

Abstract: In this paper, we tackle a generic optimal regime switching problem where the decision-making process is not the same from one regime to another. Precisely, we consider a simple model of optimal switching from competition to cooperation. To this end, we solve a two-stage optimal control problem. In the first stage, two players engage in a dynamic game with a common state variable and one control for each player. We solve for open-loop strategies with a linear state equation and linear-quadratic payoffs. More importantly, the players may also consider the possibility to switch at finite time to a cooperative regime with the associated joint optimization of the sum of the individual payoffs. Using theoretical analysis and numerical exercises, we study the optimal switching strategy from competition to cooperation. We also discuss reverse switching.

Keywords: cooperation; competition; dynamic games; multi-stage optimal control (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

Published in V. Veliov; J. Haunschmied; R. Kovacevic; W. Semmler. Dynamic Economic Problems with Regime Switches, Springer International Publishing, pp.209-225, 2021, Dynamic Modeling and Econometrics in Economics and Finance, 978-3-030-54575-8. ⟨10.1007/978-3-030-54576-5_9⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Optimal switching from competition to cooperation: a preliminary exploration (2021)
Working Paper: Optimal switching from competition to cooperation: a preliminary exploration (2020)
Working Paper: Optimal switching from competition to cooperation: a preliminary exploration (2020)
Working Paper: Optimal switching from competition to cooperation: a preliminary exploration (2020)
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:hal:journl:hal-02950698

DOI: 10.1007/978-3-030-54576-5_9

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().