Title

Envelope Theorems For Locally Differentiable Open-Loop Stackelberg Equilibria Of Finite Horizon Differential Games

Keywords

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

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. © 2010 Elsevier B.V.

Publication Date

6-1-2010

Publication Title

Journal of Economic Dynamics and Control

Volume

34

Issue

6

Number of Pages

1123-1139

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1016/j.jedc.2010.01.016

Socpus ID

77952009802 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/77952009802

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