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A Dynamic Game on Renewable Natural Resource Exploitation

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  • Shinji Kobayashi

Abstract

This paper studies oligopolistic firms’ exploitation of a renewable natural resource in a differential game. It is well known that finding Markov perfect equilibrium in differential games is extremely difficult except for games that are linear-quadratic. In this paper, we develop a differential game model that is not linear-quadratic and derive Markov perfect equilibrium for the game. One salient feature of the model is that consumers are concerned with the stock of the natural resource in that consumers’ demand for harvest of the natural resource depends upon the level of the stock of the natural resource. We also examine the effects of taxation on equilibrium. Moreover, we discuss open-loop equilibrium for the games under both cooperative and noncooperative exploitation of the natural resource

Suggested Citation

  • Shinji Kobayashi, 2004. "A Dynamic Game on Renewable Natural Resource Exploitation," Econometric Society 2004 Australasian Meetings 122, Econometric Society.
    • Handle: RePEc:ecm:ausm04:122
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    File URL: http://repec.org/esAUSM04/up.22138.1077462738.pdf
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    References listed on IDEAS

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    1. David Levhari & Leonard J. Mirman, 1980. "The Great Fish War: An Example Using a Dynamic Cournot-Nash Solution," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 322-334, Spring.
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    More about this item

    Keywords

    Renewable natural resource; oligopoly; differential game;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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