International Society of Dynamic Games

Dynamic Games and Applications Seminar

Progressive taxes in groundwater regulation: a differential game

Apr 30, 2026 11:00 AM — 12:00 PM (Montreal time)

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In this paper, we investigate optimal regulation to manage a groundwater extraction problem through a leader–follower differential game. A water agency, acting as the leader, selects two policy instruments, a water tax and a water threshold, to control withdrawals and preserve the aquifer. Farmers, as followers, determine their optimal extraction levels given the water agency’s policy. We compare scenarios in which the regulator controls both instruments with more restrictive cases. We show that a linear–progressive tax scheme strictly dominates linear taxation in terms of aquifer preservation and social welfare. Moreover, allowing feedback adjustment of the water threshold performs close to the fully flexible benchmark.

Dynamic Games and Applications Seminar

Investment under Uncertainty in a Durable Goods Market

Apr 2, 2026 11:00 AM — 12:00 PM (Montreal time)

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We consider a monopolistic firm that decides on the timing and production capacity for introducing a durable good into a market characterized by consumer heterogeneity and project value uncertainty. We show that when consumers are less heterogeneous, the firm should invest later, i.e. wait for product attractiveness to grow to a sufficiently high level, in a large production capacity. In case consumers are very heterogeneous, the firm should invest early in a small production capacity. In the latter case, selling the durable good in small quantities enables the firm to price discriminate over time, generating a high payoff. It follows that in an economic environment where it is optimal for the firm to invest early in a small capacity, i.e. when the trend and volatility of the project value is low, the firm’s payoff is higher when consumer preferences are more heterogeneous. On the other hand, in an economic environment where it is optimal for the firm to invest late in a large capacity, i.e. when the trend and volatility are high, the firm prefers more homogeneous consumer preferences. The fact that an increase in consumer heterogeneity may have a positive effect on the firm value distinguishes the durable goods case from market settings with non-durable products.

(with Herbert Dawid and Xingang Wen)

Dynamic Games and Applications Seminar

On the Desirability of the Global Minimum Tax – A Dynamic View

Mar 26, 2026 11:00 AM — 12:00 PM (Montreal time)

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Corporate tax competition has driven statutory rates downward for decades, eroding fiscal capacity and raising concerns about global equity. The OECD/G20 Global Minimum Tax (GMT) seeks to mitigate this “race to the bottom”, yet its dynamic implications remain unclear.

We study the GMT with a differential game of international tax competition with mobile capital. Governments set corporate tax rates while multinational firms reallocate capital in response to effective tax wedges created by the minimum tax and the substance-based income exclusion. We distinguish between Markovian behavior, in which governments adjust tax rates in response to current capital allocations, and open-loop behavior, in which they commit to tax paths in advance. We also compare enforcement through Qualified Domestic Minimum Top-up Taxes (QDMTT) and the Income Inclusion Rule (IIR).

In the Markovian game, the GMT does not pin down a unique long-run outcome: a continuum of steady states arises under both enforcement regimes, including low-tax configurations. By contrast, under open-loop commitment the dynamic system is saddle-point stable, implying convergence to a unique transition path for given initial conditions. Commitment therefore acts as a dynamic selection device. Whether the economy converges to high- or low-tax configurations depends on enforcement: under QDMTT, a race to the bottom may emerge when public revenue is used inefficiently and the minimum tax is sufficiently high, whereas under IIR such dynamics are ruled out. Overall, the GMT can stabilize tax competition under commitment but does not, in general, eliminate downward pressure on statutory rates.

(with Weihua Ruan and Benteng Zou)