Modelling of Industrial Policy on the Basis of Game-Theoretic Models of Interaction Between Government and Business

Abstract:

A change in the direction of industrial policy related to the transition from the situation of state dominance to the situation of expanding the number of parties interested in the results of industrial policy is relevant in developed countries. The purpose of the article is to develop on the platform of game theory the model of relationship between the state and industrial enterprises, taking into account their interests, strategies, conflict areas and consensus zones. The study is based on the multi-subject approach, which implies the existence of a number of independent entities with their own goals and strategies. We use the methodology of evolutionary game theory to analyze the interests of the state and industrial enterprises, their coincidences and conflicts. These methods allow simulating the processes of a system with several generations that have a continuity of solutions. This tool enables to quantify the equilibrium points and parameters that affect the transition from one equilibrium state to another. The authors identify the characteristics of industrial policy as a game as well as formalize the interaction between the state and enterprises as a game in a normal form. Moreover, we present the functions of the utility of players and the equation of replication dynamics. To formalize problems and find the equations of replication dynamics, we have considered the problem in a general form for continuous asymmetric games.