ANALYSIS OF NASH EQUILIBRIA IN A CLASS OF CAPITAL ACCUMULATION GAMES

In a simple capital accumulation game we study existence and dynamic p roperties of the cooperative solution, two kinds of Markov perfect equ ilibria (MPE), and a trigger strategy equilibrium. In the cooperative solution the stock always converges towards a steady state. This prope rty is shared by our first MPE, whereas the second type of MPE may res ult in complicated dynamics. A Pareto comparison of both MPE depends o n the parameter specifications but can turn out either way. Finally, w e show how the players can achieve the efficient payoffs of the cooper ative solution as an equilibrium outcome by using trigger strategies.