Strategic complements and substitutes, and potential games

Pradeep Dubey; Ori Haimanko; Andriy Zapechelnyuk

doi:10.1016/j.geb.2004.10.007

Strategic complements and substitutes, and potential games

Pradeep Dubey, Ori Haimanko^*, Andriy Zapechelnyuk

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

Abstract

We show that games of strategic complements, or substitutes, with aggregation are "pseudo-potential" games. The upshot is that they possess Nash equilibria in pure strategies (NE), even if the strategy sets are not convex; and that various dynamic processes converge to NE. In particular, NE exist in Cournot oligopoly with indivisibilities in production. Our notion of aggregation is quite general and enables us to take a unified view of several disparate models.

Original language	English
Pages (from-to)	77-94
Number of pages	18
Journal	Games and Economic Behavior
Volume	54
Issue number	1
DOIs	https://doi.org/10.1016/j.geb.2004.10.007
Publication status	Published - Jan 2006

Keywords

Cournot oligopoly
Nash equilibrium
Pseudo-potential games
Strategic complements and substitutes

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AB - We show that games of strategic complements, or substitutes, with aggregation are "pseudo-potential" games. The upshot is that they possess Nash equilibria in pure strategies (NE), even if the strategy sets are not convex; and that various dynamic processes converge to NE. In particular, NE exist in Cournot oligopoly with indivisibilities in production. Our notion of aggregation is quite general and enables us to take a unified view of several disparate models.

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Strategic complements and substitutes, and potential games

Abstract

Keywords

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