Inequality and Growth: A Two-Player Dynamic Game with Production and Appropriation

Here is the third of my (very old now) doctoral dissertation papers.

The title gives it away. It contains a differential game with two players who hold wealth and can use it to produce more wealth and/or to protect their wealth holdings and/or to expand such wealth holdings at each other’s expense via outright appropriation.

To focus solely on the dynamics of production vs. appropriation, I excluded exchange as a possibility. This makes ownership (or excludability) itself into an endogenous variable — just as in real life, in spite of the illusion of stable social order one may live under.

I pinned down the basic Markov-Nash game equilibrium with their initial wealth endowments as one of the parameters. I think it’s a neat paper that, unfortunately (such is life!) I never developed further.

Take it apart!