earticle

영어

It is widely known that dynamic game techniques are useful to analyze the principles of decision making in situations involving two or more players with conflicting interests.
The paper reviews dynamic game techniques to examine whether the methods could be applicable to regional policy coordination. For this purpose, dynamic game techniques are
applied to a symmetric two-region model that describes the relationship between the benefits and the costs of economic growth for both of the regions.
In a cooperative game, each region forms a common goal, which is the minimization of the weighted sum of all the regions' welfare costs. In a non-cooperative game, each region independently pursues the minimization of its own welfare cost instead of aiming to achieve a common goal. The policy coordination rules are obtained as feedback solutions to calculate the welfare cost of each region.
Depending upon the structure and the specific parameter values of the underlying model in a dynamic game, the total welfare gain could be distributed differently to each region. In a dynamic game framework, it is difficult to gain much insight into the theoretical implication of how the total gains would be distributed to each region.
Numerical procedures are therefore employed to evaluate the rules and their welfare differences.
In our experiment, the structure and the estimated parameter values of the underlying model lead to the distribution of the total welfare gain in such a way that the Nash equilibrium imposes a better welfare implication to the Region 1 than the cooperative equilibrium does. In this case, it is advised that the government should intervene the policy coordination process based on a carefully designed compensation mechanism.