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Duke Economics Working Paper #01-06

On the Endogeneity and Robustness of Cournot-Nash and Stackelberg Equilibria: Games of Accumulation


Richard Romano and Huseyin Yildirim

Abstract

We characterize equilibria of games with two properties: (i) Agents have the opportunity to adjust their strategic variable after their initial choices and before payoffs occur; but (ii) they can only add to their initial amounts. The equilibrium set consists of just the Cournot-Nash outcome, one or both Stackelberg outcomes, or a continuum of points including the Cournot-Nash outcome and one or both Stackelberg outcomes. A simple theorem that uses agents' standard one-period reaction functions and the one-period Cournot-Nash and Stackelberg equilibria delineates the equilibrium set. Applications include contribution games to public goods, oligopoly games, and rent-seeking games.

Keywords: Accumulation, Dynamic Games, Cournot-Nash Outcome, Stackelberg Outcome

JEL: C72, D43, H40

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