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Investment and the tragedy of the commons

Author

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  • Rainald Borck

    (Humboldt University Berlin)

Abstract

This note studies the exploitation of a common proerty resource when firms choose a technology before exploiting the resource. The sequential choice leads to overinvestment. Moreover, exploitation levels are higher than they would be if technology and labour input were chosen simultaneously. The tragedy of the commons is aggravated.

Suggested Citation

  • Rainald Borck, 2001. "Investment and the tragedy of the commons," Economics Bulletin, AccessEcon, vol. 4(2), pages 1-6.
    • Handle: RePEc:ebl:ecbull:eb-01d60001
    as

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    References listed on IDEAS

    as
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    6. Chaim Fershtman & Kenneth L. Judd, 2006. "Equilibrium Incentives in Oligopoly: Corrigendum," American Economic Review, American Economic Association, vol. 96(4), pages 1367-1367, September.
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    Keywords

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    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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