On a Nonlinear Feedback Strategy Equilibrium of a Dynamic Game

This paper reports an intriguing property of a nonlinear feedback Nash strategy equilibrium in a dynamic game with no state variable in the payoff of each player. While the open-loop Nash and linear feedback Nash equilibria coincide with the static Cournot-Nash equilibrium in such a framework, the nonlinear feedback strategy can be properly defined and, furthermore, a particular type of the equilibrium outcomes approximates the bilateral collusion, as is originally proved by Tsutsui and Mino (1990) for a standard differential game with one state variable.