Abstract
It is argued here that the Nash equilibrium calculated by Gradus (1989) is not the Nash equilibrium found when applying the definition generally employed in differential game theory. The model presented by Gradus would call for a modified Nash equilibrium concept as outlined in this note.
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References
Basar, R., and Olsder, G. J. (1982):Dynamic Noncoperative Game Theory. London: Academic Press.
Gradus, R. (1989): “A Differential Game between Government and Firms: A Non-Cooperative Approach.”Journal of Economics/Zeitschrift für Nationalökonomie 50: 237–256.
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The author is indebted to Jan van Geldrop and an anonymous referee.
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Withagen, C. A differential game between government and firms: Comments. Journal of Economics Zeitschrift für Nationalökonomie 52, 285–290 (1990). https://doi.org/10.1007/BF01227526
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DOI: https://doi.org/10.1007/BF01227526