Intrinsic Comparative Dynamics of Locally Differentiable Feedback Stackelberg Equilibria

<Para ID="Par1">The intrinsic comparative dynamics of locally differentiable feedback Stackelberg equilibria are derived for the ubiquitous class of autonomous and exponentially discounted infinite horizon differential games. It is shown that the follower’s intrinsic comparative dynamics agree in their form and qualitative properties with those of every player in a feedback Nash equilibrium, while those of the leader differ in form. The difference allows, in principle, an empirical test of the leader-follower role in a differential game. Separability conditions are identified on the instantaneous payoff and transition functions under which the intrinsic comparative dynamics of feedback Nash equilibria, feedback Stackelberg equilibria, and those in the corresponding optimal control problem are qualitatively identical. Copyright Springer Science+Business Media New York 2015