Dynamic Games in Economics by Josef Haunschmied Vladimir M. Veliov & Stefan Wrzaczek

Author:Josef Haunschmied, Vladimir M. Veliov & Stefan Wrzaczek
Language: eng
Format: epub
Publisher: Springer Berlin Heidelberg, Berlin, Heidelberg

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where c denotes the relative weight in the objective between the value of the lake as a waste sink and the damage to the lake. For a high c it is to be expected that the resulting state will be oligotrophic. Note that the communities are assumed to be the same. We will only consider symmetric Nash equilibria again so that the index i will at some point disappear.

4.2 Open-Loop Nash Equilibrium

Using Pontryagin’s maximum principle, the current-value Hamiltonian functions become

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and since sufficiency conditions are satisfied, the open-loop Nash equilibrium conditions become

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