A DIFFERENTIAL GAME MODEL FOR A DEVELOPING AND A DEVELOPED COUNTRY

A differential game (DG) model for a developing and a developed country is considered.Each player makes decisions about how much resource to be used to restrict the opponent's developmentso as to maximize his weighted sum of current consumption and final output.Current consumption isassumed to be preferred to final output for both players.The developing country is assumed to havea higher economic growth rate and a higher preference to final output,whereas the developed countryis assumed to have a higher initial income and a higher efficiency in restricting his opponent.Thisproblem is investigated under three kinds of information structures,i.e.,a zerosum,a nonzero-sum,anda Stackelberg game.Open-loop equilibrium solutions are obtained for all the three cases.Economicimplications of the result are provided.