Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/220057 
Year of Publication: 
2020
Series/Report no.: 
Tinbergen Institute Discussion Paper No. TI 2020-020/II
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
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 re- sponses. We extend the theory of differential games to deal with payoffs under discontinuous strategies. Our methods work under general functional forms.
JEL: 
C73
Q54
Document Type: 
Working Paper

Files in This Item:
File
Size
1.49 MB





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