Inefficiency of credible strategies in oligopolistic resource markets with uncertainty
type: Item
instance of: scholarly article
title: Inefficiency of credible strategies in oligopolistic resource markets with uncertainty
zbMATH Open document ID: 0643.90017
DOI: 10.1016/0165-1889(87)90028-5
author: Frederick van der Ploeg
publication date: 1987-01-01T00:00:00Z
full work available at URL: inefficiency-of-credible-strategies-in-oligopolistic-resource-markets-with-uncertainty(6bc6cbe2-bc1f-49ef-9988-80d6e2f4a4ba).html
review text: The paper discusses the consequences of different information structures in an N-person dynamic nonzero-sum game with the Nash equilibrium concept. The model considered is a (stochastic) ordinary differential equation which describes the harvesting (by N firms) of a common renewable resource. Each firm wants to maximize its expected value of the discounted stream of profits. The price curve is a decreasing function with respect to the total harvesting rate of all firms together. When the actions of the firms do not lead to extinction, the planning horizon is finite. The paper discusses open-loop, closed-loop, memoryless and feedback information structures and the consequences for the solution. In addition the sub-game perfect Nash equilibrium solution is discussed. Interpretations of the results are given in an economic context, in terms of shadow prices, social benefit function, efficient and collusive (if the firms form a cartel) outcomes, etc. The well-known fact that an increase in information can be detrimental is elaborated upon. The mathematical techniques used are the maximum principle, the Hamilton- Jacobi-Bellman equation and some Ito-stochastic calculus.
Mathematics Subject Classification ID: 91B76
Mathematics Subject Classification ID: 91B62
Mathematics Subject Classification ID: 91A40
Mathematics Subject Classification ID: 91A15
Mathematics Subject Classification ID: 91A60
Mathematics Subject Classification ID: 91B24
Mathematics Subject Classification ID: 91A10
zbMATH DE Number: 4049350
zbMATH Keywords: different information structures
zbMATH Keywords: N-person dynamic nonzero-sum game
zbMATH Keywords: Nash equilibrium
zbMATH Keywords: harvesting
zbMATH Keywords: common renewable resource
zbMATH Keywords: open-loop
zbMATH Keywords: closed- loop
zbMATH Keywords: memoryless
zbMATH Keywords: feedback
zbMATH Keywords: sub-game perfect Nash equilibrium
reviewed by: Geert Jan Olsder
MaRDI profile type: Publication
OpenAlex ID: W2146155707
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published in: Journal of Economic Dynamics and Control
description: scientific article; zbMATH DE number 4049350