On price characterization and Pareto-efficiency of game equilibrium growth (Q1082235)

A smooth aggregative model of economic growth is analyzed as a game between generations with altruistic preferences. The resulting (game- theoretic) equilibrium growth path is shown to give rise to a Pareto- efficient consumption stream. Specifically, the resolution of intertemporal conflicts by means of a (subgame-)perfect Nash equilibrium of the game determines consumption and bequest behaviour of each generation. For consumption and production programs resulting from differentiable equilibrium strategies a general and complete characterization in terms of ''competitive'' prices is given. From these prices one infers efficiency of the growth path and Pareto-efficiency of the corresponding consumption stream by standard methods.