Strategic complements and substitutes,and potential games |
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| Institution: | 1. Department of Economics, Stanford University, USA;2. Department of Economics, Dartmouth College, USA;3. Graduate School of Business, Stanford University, USA;4. NBER, USA |
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| 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. |
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