Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/216997 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8246
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We characterise the entire set of symmetric stationary Markov-perfect Nash equilibria (MPE) in a differential game of public good investment, using the canonical problem of climate change as an example. We provide a sufficient and necessary condition for MPE and show how the entire set of MPE is constructed. The equilibrium in continuous strategies, unique in our context, is Pareto-dominated by any other equilibrium. If a Pareto-undominated steady state exists, it is sustained by trigger-like strategies, with deviations above and below the steady state leading to different responses. We extend the theory of differential games to deal with payoffs under discontinuous strategies. Our methods work under general functional forms.
Subjects: 
differential games
Markov-perfect Nash equilibrium
dynamic investment games
dynamic public goods
climate change
JEL: 
C61
C73
D90
Q54
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.