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Strategic exploitation of a common-property resource under uncertainty

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  • Antoniadou, Elena
  • Koulovatianos, Christos
  • Mirman, Leonard J.

Abstract

We 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 Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 65 (2013)
Issue (Month): 1 ()
Pages: 28-39

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Handle: RePEc:eee:jeeman:v:65:y:2013:i:1:p:28-39

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Web page: http://www.elsevier.com/locate/inca/622870

Related research

Keywords: Renewable resource exploitation; Stochastic non-cooperative dynamic games; The commons;

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References

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  1. Sundaram, Rangarajan K., 1989. "Perfect equilibrium in non-randomized strategies in a class of symmetric dynamic games," Journal of Economic Theory, Elsevier, vol. 47(1), pages 153-177, February.
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Citations

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Cited by:
  1. Christos Koulovatianos & Leonard J. Mirman & Marc Santugini, 2007. "Optimal Growth and Uncertainty: Learning," Cahiers de recherche 07-05, HEC Montréal, Institut d'économie appliquée, revised Feb 2008.
  2. Agbo, Maxime, 2014. "Strategic exploitation with learning and heterogeneous beliefs," Journal of Environmental Economics and Management, Elsevier, vol. 67(2), pages 126-140.
  3. Christos Koulovatianos, 2014. "Strategic Exploitation of a Common-Property Resource Under Rational Learning About its Reproduction," CREA Discussion Paper Series 14-06, Center for Research in Economic Analysis, University of Luxembourg.
  4. Fesselmeyer, Eric & Santugini, Marc, 2013. "Strategic exploitation of a common resource under environmental risk," Journal of Economic Dynamics and Control, Elsevier, vol. 37(1), pages 125-136.
  5. Ngo Long, 2011. "Dynamic Games in the Economics of Natural Resources: A Survey," Dynamic Games and Applications, Springer, vol. 1(1), pages 115-148, March.
  6. Dina Tasneem & Jim Engle-Warnick & Hassan Benchekroun, 2014. "An Experimental Study of a Common Property Renewable Resource Game in Continuous Time," CIRANO Working Papers 2014s-09, CIRANO.
  7. Hiro Sakamoto, 2013. "A dynamic common-property resource problem with potential regime shifts," Discussion papers e-12-012, Graduate School of Economics Project Center, Kyoto University.
  8. Leonard Mirman & Marc Santugini, 2014. "Learning and Technological Progress in Dynamic Games," Dynamic Games and Applications, Springer, vol. 4(1), pages 58-72, March.

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  1. Socio-economics of Fisheries and Aquaculture

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