An approach to intertemporal equilibrium with production

Conclusion This paper is devoted to considering the implications of intertemporal economic equilibrium in a model with production. To this end, a differential game with a Leontief technology is formulated. In the two-person zero-sum game, it was found that an intertemporal equilibrium is feasible. Furthermore, it was found to be decentralizable, with a required informational exchange mechanism no more onerous than in other decentralized procedures, including the tatonnement processes.In the non-zero-sum case decentralization is impossible for closed loop solutions. The interaction of the strategy sets introduces externalities even when production technology is convex. Finally, while a Nash solution is guaranteed, Pareto optimality requires a two-stage optimization approach.This paper was presented at the International Conference of the Atlantic Economic Society held in Vienna, Austria, May 10–18, 1979.