Two‐Aggregate Games: Demonstration Using a Production–Appropriation Model2. (16th October 2018)

• Record Type: Journal Article
• Authors: Cornes, Richard; Hartley, Roger; Tamura, Yuji
• Is Part Of: Scandinavian journal of economics. Volume 121:Number 1(2019)
• Page Start: 353
• Page End: 378
• Publication Date: 2018-10-16
• Subjects: Conflict -- insecure private property rights -- non‐cooperative game; Economics -- Periodicals; 330.05
• DOI: 10.1111/sjoe.12257
• Languages: English
• ISSNs: 0347-0520

Abstract

Abstract: We expand the scope of the two‐aggregate method by applying it to a situation in which many heterogeneous players are free to contribute to both aggregates. Such situations naturally arise in various resource allocation problems. Hence, our method is useful in many applications. A production–appropriation model is employed to illustrate how the problem of establishing the Nash equilibrium can be reduced from solving n >2 best‐response functions in n unknowns to solving two consistency conditions in two unknowns. We then conduct a comparative static exercise that the conventional approach could not handle easily, if at all, to demonstrate the power of our method.