Government-private sector relations as a Stackelberg game. A degenerate case (Q1099764)

When modelling government-private sector relations in economics as a Stackelberg game, the optimization problems of both players are strongly coupled. If the government and the private sector have similar or contradictory points of view on some issues, this will lead to a proportionality relation between some of the weighting matrices in the players' cost functions. In this case an appropriate change of variables leads to a new Stackelberg game where coupling appears only in terminal conditions.