Abstract

This paper contributes to the understanding of economic strategic behaviors in inter-temporal settings. Comparing the MPE and the OLNE of a widely used class of differential games it is shown: (i) what qualifications on behaviors a markov (dynamic) information structure brings about compared with an open-loop (static) information structure, (ii) what is the reason leading to intensified or reduced competition between the agents in the long run. It depends on whether agents’ interactions are characterized by markov substitutability or markov complementarity, which can be seen as dynamic translations of the ideas of strategic substitutability and strategic complementarity (Bulow et al. 1985, Journal of Political Economy 93:488–511). In addition, an important practical contribution of the paper for modelers is to show that these results can be directly deduced from the payoff structure, with no need to compute equilibria first