Existence and Generic Stability of Strong Noncooperative Equilibria of Vector-Valued Games

In this paper, we obtain an existence theorem of general strong noncooperative equilibrium point of vector-valued games, in which every player maximizes all goals. We also obtain an existence theorem of strong equilibrium point of vector-valued games with single-leader–multi-follower framework by using the upper semicontinuous of parametric strong noncooperative equilibrium point set of the followers. Moreover, we obtain some results on the generic stability of general strong noncooperative equilibrium point vector-valued games.

Ambiguity and long-run cooperation in strategic games

We study the effects of ambiguity on long-run cooperation in infinitely repeated strategic games. Using a simple parametric model of ambiguity, we study conditions for sustaining cooperative equilibria in the long-run. We apply our framework to the prisoner’s dilemma and duopoly models. We find that (i) ambiguity may affect the game’s structure eventually making the noncooperative equilibrium ex ante preferred; (ii) higher levels of ambiguity make long-run cooperation less likely since it makes punishment schemes less effective; and (iii) large levels of ambiguity may preclude the possibility of mutually beneficial long-run agreements, even when cooperation is beneficial from an ex ante perspective.

Transboundary Emission Under Stochastic Differential Game

In this study we provide a more robust transboundary industrial pollution reduction strategy for global emission collaborations. We consider the dynamics of each country’s quantity of pollution as a Brownian motion with Jumps to capture the systematic jumps caused by surprise effects arising from policy uncertainties within the economy. When the output of each country’s domestic consumption good production is proportional to the level of pollution emissions, we apply optimal control theory to find the Nash noncooperative, cooperative and Stackelberg optimal emission paths. To formulate this problem we allow each country’s discounted stream of net revenues to be maximized via a Stochastic Differential Game (SDG). We then articulate the Nash noncooperative equilibria, cooperative equilibria and Stackelberg equilibria via a feedback control strategy. We show that the outcome of the game depends on the parameters of the game and the type of equilibrium one considers. Furthermore, in this continuous-time differential game paradigm model we show that the feedback Stackelberg equilibrium will not coincide with the feedback Nash noncooperative equilibrium. In this setting, if the first mover advantage of the leader (Player I) disappears then both equilibria coincide.

Linear-State Differential Games in Partition Function Form

We introduce a partition function for [Formula: see text]-player linear-state cooperative differential games. The value of a coalition within a given coalition structure is defined as its noncooperative equilibrium payoff of a game played between the coalitions. We also define two core notions, namely, the cautious and the singleton core. If the game is convex, then the cores are nonempty. In order to illustrate the approach, we consider a symmetric game of pollution accumulation.

Trade Agreements: Theoretical Foundations

International trade agreements have played a significant role in the reduction of trade barriers that has taken place since the end of World War II. One objective of the theoretical literature on trade agreements is to address the question of why bilateral and multilateral trade agreements, rather than simple unilateral actions by individual countries, have been required to reduce trade barriers. The predominant explanation has been the terms of trade theory, which argues that unilateral tariff policies lead to a prisoner’s dilemma due to the negative effect of a country’s tariffs on its trading partners. Reciprocal tariff reductions through a trade agreement are required to obtain tariff reductions that improve on the noncooperative equilibrium. An alternative explanation, the commitment theory of trade agreements, focuses on the use of external enforcement under a trade agreement to discipline domestic politics. A second objective of the theoretical literature has been to understand the design of trade agreements. Insights from contract theory are used to study various flexibility mechanisms that are embodied in trade agreements. These mechanisms include contingent protection measures such as safeguards and antidumping, and unilateral flexibility through tariff overhang. The literature also addresses the enforcement of agreements in the absence of an external enforcement mechanism. The theories of the dispute settlement process of the WTO portray it as an institution with an informational role that facilitates the coordination among parties with incomplete information about the states of the world and the nature of the actions taken by each signatory. Finally, the literature examines whether the ability to form preferential trade agreements serves as a stumbling block or a building block to multilateral liberalization.