ABSTRACT
The survey of applications is preceded by a brief exposition of the building blocks of dynamic optimization and differential games. The easiest approach to a differential game probably consists of considering it as the strategic version of an optimal control problem, with many agents instead of a single one. Some classes of differential games have been identified as producing strongly time consistent equilibria under open-loop information. Quite intuitively, firms need to install capacity to supply goods. This is a major subject in applications of differential game theory to IO models, both in monopoly and in oligopoly settings, and overlaps with a vast literature belonging to the theory of growth. The Solow—Swan game is a partial equilibrium model, independent of the assumptions about the behaviour of firms, which in the original macroeconomic approach are supposed to be perfectly competitive agents while in the foregoing game are assumed to behave as strategic players.
