Title

Envelope theorems for locally differentiable open-loop Stackelberg equilibria of finite horizon differential games

Authors

Authors

R. A. Van Gorder;M. R. Caputo

Comments

Authors: contact us about adding a copy of your work at STARS@ucf.edu

Abbreviated Journal Title

J. Econ. Dyn. Control

Keywords

Stackelberg duopoly; Envelope theorems; Differential games; Open-loop; information structure; INVESTMENT; Economics

Abstract

Envelope theorems are established for locally differentiable Stackelberg equilibria of a general class of finite horizon differential games with an open-loop information structure. It is shown that the follower's envelope results agree in form with those of any player in an open-loop Nash equilibrium, while those of the leader differ. An unanticipated conclusion is that the costate vector of the leader but not that of the follower corresponding to the state vector of the differential game may be legitimately interpreted as the shadow value of the state vector for time-inconsistent open-loop Stackelberg equilibria. Surprisingly, the same cannot be said for time-consistent open-loop Stackelberg equilibria. (C) 2010 Elsevier B.V. All rights reserved.

Journal Title

Journal of Economic Dynamics & Control

Volume

34

Issue/Number

6

Publication Date

1-1-2010

Document Type

Article

Language

English

First Page

1123

Last Page

1139

WOS Identifier

WOS:000277805000008

ISSN

0165-1889

Share

COinS