Two-Aggregate Games: Demonstration Using a Production-Appropriation Model

Scandinavian Journal of Economics, Forthcoming

31 Pages Posted: 3 Nov 2010 Last revised: 29 Jan 2017

See all articles by Richard C. Cornes

Richard C. Cornes

Australian National University (ANU) - Faculty of Economics & Commerce; CESifo (Center for Economic Studies and Ifo Institute)

Roger Hartley

Keele University - Department of Economics

Yuji Tamura

Department of Economics and Finance, La Trobe University; ANU Centre for Economic Policy Research, Australian National University

Multiple version iconThere are 3 versions of this paper

Date Written: January 29, 2017

Abstract

We expand the scope of the two-aggregate method by applying it to a situation where 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.

Keywords: noncooperative games, aggregate games, conflict, appropriation

JEL Classification: C72, D74

Suggested Citation

Cornes, Richard C. and Hartley, Roger and Tamura, Yuji, Two-Aggregate Games: Demonstration Using a Production-Appropriation Model (January 29, 2017). Scandinavian Journal of Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1702009 or http://dx.doi.org/10.2139/ssrn.1702009

Richard C. Cornes

Australian National University (ANU) - Faculty of Economics & Commerce ( email )

Canberra, Australian Capital Territory 2601
Australia

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Roger Hartley

Keele University - Department of Economics ( email )

ST5 5BG Staffordshire, Staffs, ST5 5BG
United Kingdom

Yuji Tamura (Contact Author)

Department of Economics and Finance, La Trobe University ( email )

Melbourne, VIC 3086
Australia

HOME PAGE: http://www.latrobe.edu.au/economics

ANU Centre for Economic Policy Research, Australian National University

Canberra, ACT 2600
Australia

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