Strategic exploitation of a common-property resource under uncertainty
AbstractWe construct a game of noncooperative common-resource exploitation which delivers analytical solutions for its symmetric Markov-perfect Nash equilibrium. We examine how introducing uncertainty to the natural law of resource reproduction affects strategic exploitation. We show that the commons problem is always present in our example and we identify cases in which increases in risk amplify or mitigate the commons problem. For a specific class of games which imply Markov-perfect strategies that are linear in the resource stock (our example belongs to this class), we provide general results on how payoff-function features affect the responsiveness of exploitation strategies to changes in riskiness. These broader characterizations of games which imply linear strategies (appearing in an Online Appendix) can be useful in future work, given the technical difficulties that may arise from the possible nonlinearity of Markov-perfect strategies in more general settings.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Environmental Economics and Management.
Volume (Year): 65 (2013)
Issue (Month): 1 ()
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Web page: http://www.elsevier.com/locate/inca/622870
Renewable resource exploitation; Stochastic non-cooperative dynamic games; The commons;
Other versions of this item:
- Christos Koulovatianos & Elena Antoniadou & Leonard J.Mirman, 2007. "Strategic Exploitation of a Common-Property Resource under Uncertainty," Vienna Economics Papers 0703, University of Vienna, Department of Economics.
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- D90 - Microeconomics - - Intertemporal Choice - - - General
- D - Microeconomics
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