【正文】
rmal form game if is finite and is finite for every , then there exist at least one NE, possibly involving mixed strategies. See Fudenberg and Tirole (1991) for a rigorous proof. n11{ , . . . , 。( ) 0 , 39。( ) 0v G v G??igCont’d His payoff is (1) In NE , for each , must maximize (1), given that other farmers choose 1 1 1( . . . . . . )i i i i n ig v g g g g g c g??? ? ? ? ? ? ?**1( , .. ., )ngg *igi* * * *1 1 1( , .. ., , , )i i ng g g g??Cont’d First order condition (FOC): (2) (where ) Summing up all farmers’ FOC and then dividing by yields (3) **( ) 39。( * ) 0v G G v G cn? ? ?Cont’d In contrast, the social optimum should resolve FOC: (4) Comparing (3) and (4), we can see that Implications for social and economic systems (Coase Theorem) **Gm a x ( )G v G G c?( * * ) * * 39。 (2) Firm 2 observes and then chooses a quantity ; (3) The payoff to firm is given by the profit function is the inverse demand function, , and is the constant marginal cost of production (fixed cost being zero). 1 0q ?1q 2 0q ?( , ) [ ( ) ]i i j iq q q P Q c? ??i()P Q a Q?? 12Q q q??cCont’d We solve this game with backward induction (provided that ). 2 2 1 2 2 1 2* 12 2 1a r g m a x ( , ) ( )()2q q q q a q q ca q cq R q?? ? ? ? ???? ? ?1q a c??Cont’d Now