Dynamic Games: Theory, Algorithms and Applications

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The objective of this research program is to develop mathematical models and efficient algorithms to solve practical problems and supply plausible recommendations in three areas: supply chains, markets with counterfeiters and environmental management. These problems share two important features that make each of them a dynamic game, namely, they involve few economic agents (firms or countries) having interdependent payoffs, and are inherently dynamic, i.e., the agents compete or cooperate repeatedly over time.****(i) Supply chains. It is well-known that a lack of coordination between the different layers of a supply chain leads to inefficiencies, i.e., lower profits for players (manufacturers and retailers), and lower benefits for consumers. A first project deals with the design of mechanisms to eliminate these inefficiencies. A second project looks at incentives to increase (re)manufacturing with used parts, which is a cost-reducing strategy and an environmentally wise one.****(ii) Counterfeiting. The International Chamber of Commerce estimates that $1.7 trillion in counterfeit goods will have been sold in 2015. This practice is also costing huge amounts in taxes and millions of jobs. Despite counterfeiting being widespread, not much research has looked at the strategic interactions over time between legal and illegal producers of goods and services. This project aims at filling the gap and improving our ability to design suitable deterrent strategies.****(iii) Environmental management. Despite the alarming statements made daily by scientists and policy makers regarding the urgency of dealing with global environmental issues, there is still no international environmental agreement (IEA) on controlling emissions and on allocating the burden among countries. This research aims at contributing to the design of IEAs, including (1) the formation of an IEA between structurally different countries; (2) the elaboration of incentive strategies to control emissions; and (3) the determination of cooperative solutions using large-scale economic-environment models.*******The contribution of this research program is twofold. At the conceptual level, devising tools aimed at eliminating the inefficiencies in supply chains is of clear value to business, and to scholars with an interest in mechanism design. Similarly, understanding strategic and dynamic competition between legal producers and counterfeiters will help governments and other parties in designing suitable policies (pricing, advertising, etc.) to abate the impact of counterfeiting. Finally, understanding how an IEA can be built and sustained is a key concern for academic researchers, policy makers and society in general. At the algorithmic level, the developments will be useful to researchers working in the areas addressed by the proposal as well as researchers working in other areas, on problems with similar mathematical structures.*********