A stochastic differential game of capitalism

被引:16
|
作者
Leong, Chee Kian [1 ]
Huang, Weihong [2 ]
机构
[1] SIM Univ, Sch Business, Singapore 599490, Singapore
[2] Nanyang Technol Univ, Sch Humanities & Social Sci, Singapore 639798, Singapore
关键词
Capitalism; Differential games; EQUILIBRIA; GROWTH;
D O I
10.1016/j.jmateco.2010.03.007
中图分类号
F [经济];
学科分类号
02 ;
摘要
We develop a stochastic differential game of capitalism to analyze the role of uncertainty. In the deterministic game, the firm's rent is completely taxed away and the firm stops investing completely. In the stochastic game, the government does not tax the firm's rent completely. The firm posts a positive rate of investment if the firm's rent exceeds the labor's income. Although the cooperative solution is indeterminate, cooperation is always Pareto optimal compared to the non-cooperative Markovian Nash equilibrium. For individual rationality, we apply a payoff distribution procedure based on Yeung and Petrosyan (2006) to derive a subgame-consistent solution. (C) 2010 Elsevier B.V. All rights reserved.
引用
收藏
页码:552 / 561
页数:10
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