Artículo de revista
Equilibrium analysis of dynamic models of imperfect competition
Fecha
2013-01Registro en:
International Journal of Industrial Organization 31 (2013) 92–101
Autor
Escobar, Juan F.
Institución
Resumen
Motivated by recent developments in applied dynamic analysis, this paper presents new sufficient conditions
for the existence of a Markov perfect equilibrium in dynamic stochastic games. The main results imply the
existence of a Markov perfect equilibrium provided the sets of actions are compact, the set of states is countable,
the period payoff functions are upper semi-continuous in action profiles and lower semi-continuous in
actions taken by rival firms, and the transition function depends continuously on actions. Moreover, if for
each firm a static best-reply set is convex, the equilibrium can be taken in pure strategies. We present and
discuss sufficient conditions for the convexity of the best replies. In particular, we introduce new sufficient
conditions that ensure the dynamic programming problem each firm faces has a convex solution set, and deduce
the existence of a Markov perfect equilibrium for this class of games. Our results expand and unify the
available modeling alternatives and apply to several models of interest in industrial organization, including
models of industry dynamics.