Markov perfect Nash equilibria in models with a single capital stock (Q403712)

In this paper, the following nonlinear differential game of \(n\) players with pay-off functionals is considered: \[ \begin{cases} \dot{x}=f(x,u(x)),\\ x(0)=x_0\in X, \end{cases} \] where \(X\subset \mathbb{R}\) is a closed interval, \[ \mathbf{u}(x)=(u_1(x),\dots,u_n(x)) \] is the strategy vector with \(u_i(x)\in \mathbb{R}^q\), and the play-off functional for the \(i\)th player is of the form \[ J_i(u_i,\mathbf{u}_i)=\int_{0}^{\infty}L_i(x(t),\mathbf{u}(x(t)))e^{-\rho t}dt, \] with \(\mathbf{u}_i(x)=(u_1(x),\dots,u_{i-1}(x),u_{i+1}(x),\dots,u_n(x)).\) Sufficient and necessary conditions for Markov perfect Nash equilibrium strategies are established. The Nash equilibria are characterized as solutions of a system of first-order ordinary differential equations. Some examples from resource and environmental economics are considered.