Differential games with nonconvexities and positive spillovers
This paper deals with differential games characterized by nonconvexities and increasing returns. The objective function of the players is convex in the control variables and nonconvex in the state variables. We employ the open loop Nash Equilibrium solution concept. This framework enables us to handle games characterized by positive spillovers and strategic complementarities, e.g. capital accumulation differential games with learning by doing, where the knowledge available to a firm is given by the knowledge accumulated by the economy as a whole.
nonconvexities positive spillovers increasing returns capital accumulation game theory