Capital accumulation and income distribution as the outcome of a dynamic game

✍ Scribed by Germán Coloma

• Publisher: Elsevier Science
• Year: 1999
• Tongue: English
• Weight: 170 KB
• Volume: 23
• Category: Article
• ISSN: 0165-1889
• DOI: 10.1016/s0165-1889(98)00054-2

✦ Synopsis

This paper presents a model of an economy with two representative agents (a capitalist and a worker) who play an in"nite-horizon dynamic game about income distribution. We consider three types of equilibria, which correspond to joint price-taking (Walrasian equilibrium) and to wage-setting by either the capitalist (capitalistic equilibrium) or the worker (laborist equilibrium). For the last two of them, an ine$cient feedback Stackelberg solution is "rst analyzed. Afterwards we apply a version of the Folk theorem and obtain a wide range of sustainable e$cient equilibria, one of which coincides with the Nash bargaining solution.