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Gains from Trade in a Differential Game Model of Asymmetric Oligopoly
Author(s) -
Fujiwara Kenji
Publication year - 2009
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.2008.00787.x
Subject(s) - oligopoly , differential game , economics , differential (mechanical device) , nash equilibrium , microeconomics , mathematical economics , mathematical optimization , mathematics , cournot competition , engineering , aerospace engineering
This paper revisits a classical topic of trade gains in a differential game model of oligopoly in which Home and Foreign firms differ in the number and cost. After deriving the feedback Nash equilibrium, we provide examples to consider how the difference in the number of firms or costs affects gainfulness of trade. We prove that feedback strategies can result in implications for trade gains which are sharply different from the open‐loop case.