A numerical method to solve a duopolistic differential game in a closed-loop equilibrium

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Universidad Complutense. Departamento de Matemática Aplicada
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In this work, we develope a numerical method to solve infinite time differential games in closed-loop equilibria. Differential games are thought to be run in dynamic decissions and competitive situations, such as marketing investments and pricing policies in a company. Closed-loop equilibria allow us to obtain strategies as a function of ourselves and our competitor. We apply our algorithm to a real data set of two competitive firms. We show how our algorithm is able to develop a different price-advertising strategy to get bigger benefits
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