Capital accumulation games of infinite duration (Q794893): Difference between revisions

This paper investigates a capital accumulation differential game with the following characteristics: i) Nerlove-Arrow capital accumulation equation: \(\dot K_ i=I_ i-\delta_ iK_ i, K_ i(0)=K_{io}\), \(i=1,2\), where \(K_ i\) stands for the capital stock, \(I_ i\) for the investment, \(\delta_ i\) for the depreciation constant and i for the number of firms; ii) Strategy set of firm i: \(S_ i=\{I_ i(t):[0,T]\to [0,\bar T_ i]\) is piecewise continuous\}; iii) Payoff for firm i: \[ J_ i=\int^{T}_{0}e^{-rt}\{\pi_ i(K_ 1,K_ 2)-C_ i(I_ i)\}dt, \] where r is the discount rate, T the finite or infinite planning horizon, \(C_ i(I_ i)\) the cost of investing \(I_ i\) units and \(\pi_ i\) the profit function. Under some assumptions the authors prove the existence of a Nash equilibrium for a finite T, and existence, uniqueness and conditional local and global asymptotic stabilities of its stationary Nash equilibrium for infinite T. Mathematically, some results are new.