Process Spillovers and Growth: A Comment on the Existence of a Stable Closed-Loop Nash Equilibrium

In a recent paper Luckraz (J. Optim. Theory Appl. 139:315-335, 2008) develops a differential game model to show that a lack of intellectual property protection can improve economic growth in economies, where large technology gaps prevail. However, this conclusion depends crucially on the fact that the closed-loop equilibrium of the model degenerates to the open-loop equilibrium. This note generalizes the results of Luckraz by formulating a setup in which the closed-loop equilibrium does not degenerate to the open-loop equilibrium of the differential game.