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Entry Deterrence in the Commons

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  • Mason, Charles F
  • Polasky, Stephen

Abstract

The authors analyze a common property resource model with a single incumbent firm that faces future potential entry of a rival. The cost of harvest from the resource is a function of the stock size. By drawing down current stock sufficiently, which lowers future stock, the incumbent can make entry unprofitable. The authors analyze the conditions under which the incumbent firm would deter entry and when entry would be allowed. Further, they analyze the effect that potential entry has on the harvest rate both before and after the date of potential entry and whether or not potential entry is welfare improving. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Mason, Charles F & Polasky, Stephen, 1994. "Entry Deterrence in the Commons," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(2), pages 507-525, May.
    • Handle: RePEc:ier:iecrev:v:35:y:1994:i:2:p:507-25
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    Cited by:

    1. Fischer, Maria-Elisabeth & Irlenbusch, Bernd & Sadrieh, Abdolkarim, 2004. "An intergenerational common pool resource experiment," Journal of Environmental Economics and Management, Elsevier, vol. 48(2), pages 811-836, September.
    2. Charles Mason & Stephen Polasky, 2002. "Strategic Preemption in a Common Property Resource: A Continuous Time Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(3), pages 255-278, November.
    3. Benchekroun, Hassan & Halsema, Alex & Withagen, Cees, 2010. "When additional resource stocks reduce welfare," Journal of Environmental Economics and Management, Elsevier, vol. 59(1), pages 109-114, January.
    4. Chakravorty, Ujjayant & Leach, Andrew & Moreaux, Michel, 2011. "Would hotelling kill the electric car?," Journal of Environmental Economics and Management, Elsevier, vol. 61(3), pages 281-296, May.
    5. James A. Brander & M. Scott Taylor, 1997. "International Trade and Open-Access Renewable Resources: The Small Open Economy Case," Canadian Journal of Economics, Canadian Economics Association, vol. 30(3), pages 526-552, August.
    6. Brian R. Copeland & M. Scott Taylor, 2009. "Trade, Tragedy, and the Commons," American Economic Review, American Economic Association, vol. 99(3), pages 725-749, June.
    7. Robin Mason & Timothy Swanson, "undated". "Entry Deterrence and Environmental Regulation," Economics Papers 1997-W9, Economics Group, Nuffield College, University of Oxford.
    8. Mason, Charles F. & Polasky, Stephen & Tarui, Nori, 2017. "Cooperation on climate-change mitigation," European Economic Review, Elsevier, vol. 99(C), pages 43-55.
    9. Brander, James A. & Scott Taylor, M., 1997. "International trade between consumer and conservationist countries," Resource and Energy Economics, Elsevier, vol. 19(4), pages 267-297, November.
    10. Espínola-Arredondo, Ana & Muñoz-García, Félix, 2013. "Asymmetric information may protect the commons: The welfare benefits of uninformed regulators," Economics Letters, Elsevier, vol. 121(3), pages 463-467.
    11. Polasky, Stephen & Bin, Okmyung, 2001. "Entry Deterrence and Signaling in a Nonrenewable Resource Model," Journal of Environmental Economics and Management, Elsevier, vol. 42(3), pages 235-256, November.
    12. Ellefsen, Hans & Kronbak, Lone Grønbæk & Ravn-Jonsen, Lars, 2014. "On International Fisheries Agreements, Entry Deterrence and Ecological Uncertainty," Discussion Papers on Economics 18/2014, University of Southern Denmark, Department of Economics.
    13. Espínola-Arredondo, Ana & Muñoz-García, Félix, 2011. "Can incomplete information lead to under-exploitation in the commons?," Journal of Environmental Economics and Management, Elsevier, vol. 62(3), pages 402-413.
    14. Mason, Charles F. & Phillips, Owen R., 1997. "Mitigating the Tragedy of the Commons through Cooperation: An Experimental Evaluation," Journal of Environmental Economics and Management, Elsevier, vol. 34(2), pages 148-172, October.
    15. Javier Aliaga Lordemann, 2021. "Experimental Field Evidence of Common Pool Resources: The Water Judge in Bolivia," Development Research Working Paper Series 01/2021, Institute for Advanced Development Studies.
    16. Ana Espinola-Arredondo & Felix Munoz-Garcia, "undated". "Entry Deterrence in the Commons with Multiple Incumbents," Working Papers 2012-1, School of Economic Sciences, Washington State University.
    17. 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.
    18. Rosas-Munoz, Juan & Espinola-Arredondo, Ana & Munoz-Garcia, Felix, 2022. "Don't Leave the Regulator Alone in the Commons: How Fishing Cooperatives Can Help Ameliorate Inefficiencies," Working Papers 2022-1, School of Economic Sciences, Washington State University.
    19. Mason, Robin & Swanson, Timothy, 2002. "The costs of uncoordinated regulation," European Economic Review, Elsevier, vol. 46(1), pages 143-167, January.

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