Nonlinear strategies in dynamic duopolistic competition with sticky prices
研究无限期双寡头博弈中，企业在粘性价格下最大化利润的反馈均衡，发现状态空间上界较低时会出现未知的非线性策略。
We discuss nonlinear strategies in an infinite horizon duopoly game with sticky prices where firms maximize their discounted sum of profit. We construct a stationary feedback equilibrium without guessing value functions and feedback strategies that solve the Hamilton-Jacobi equation. For this purpose, we study the auxiliary equation that is derived from the Hamilton-Jacobi equation. We show that the domain of the state space plays an crucial role in characterizing feedback equilibria, and discuss several implications of this observation. In particular, we find that when the upper bound of the state space is not very high, previously unknown feedback equilibria emerge.