Information structure and the tragedy of the commons in resource extraction
AbstractThis paper considers the well-known Levhari-Mirman model of resource extraction, and investigates the effects of the information structure of the dynamic game - open-loop, Markovian or history-dependent - on the equilibrium consumption path and the overall utility of the agents. The open-loop regime yields a Pareto-optimal outcome. The Markovian regime leads to the most pronounced version of the tragedy of the commons. History-dependent behavior yields an outcome set that is intermediate between the other two cases. The level of efficiency of equilibrium behaviour is thus U-shaped as a function of the level of information extraction strategies are based on. The analysis suggests that in environments characterized by a dynamic (and no market) externality, forcing agents to commit to open-loop behavior would constitute welfare-improving regulation.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2004040.
Date of creation: 00 Jun 2004
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dynamic resource games; open-loop; closed-loop and trigger strategies; Pareto optimality; regulation;
Other versions of this item:
- Rabah Amir & Niels Nannerup, 2006. "Information Structure and the Tragedy of the Commons in Resource Extraction," Journal of Bioeconomics, Springer, vol. 8(2), pages 147-165, August.
- Rabah Amir & Niels Nannerup, 2000. "Information Structure and the Tragedy of the Commons in Resource Extraction," Discussion Papers 00-09, University of Copenhagen. Department of Economics.
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
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