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Information Structure and the Tragedy of the Commons in Resource Extraction

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  • Rabah Amir

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  • Niels Nannerup

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Abstract

This 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.
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Suggested Citation

  • 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.
  • Handle: RePEc:kap:jbioec:v:8:y:2006:i:2:p:147-165
    DOI: 10.1007/s10818-006-9001-2
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    References listed on IDEAS

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    1. Datta, Manjira & Mirman, Leonard J., 1999. "Externalities, Market Power, and Resource Extraction," Journal of Environmental Economics and Management, Elsevier, vol. 37(3), pages 233-255, May.
    2. Easley, David & Spulber, Daniel F, 1981. "Stochastic Equilibrium and Optimality with Rolling Plans," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(1), pages 79-103, February.
    3. Dockner, Engelbert J. & Kaitala, Veijo, 1989. "On efficient equilibrium solutions in dynamic games of resource management," Resources and Energy, Elsevier, vol. 11(1), pages 23-34, March.
    4. Salant, Stephen W, 1976. "Exhaustible Resources and Industrial Structure: A Nash-Cournot Approach to the World Oil Market," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 1079-1093, October.
    5. Bergstrom, Theodore C, 1982. "On Capturing Oil Rents with a National Excise Tax," American Economic Review, American Economic Association, vol. 72(1), pages 194-201, March.
    6. Jonathan Cave, 1987. "Long-Term Competition in a Dynamic Game: The Cold Fish War," RAND Journal of Economics, The RAND Corporation, vol. 18(4), pages 596-610, Winter.
    7. 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.
    8. H. Scott Gordon, 1954. "The Economic Theory of a Common-Property Resource: The Fishery," Journal of Political Economy, University of Chicago Press, vol. 62, pages 124-124.
    9. Tracy R. Lewis & Richard Schmalensee, 1980. "On Oligopolistic Markets for Nonrenewable Natural Resources," The Quarterly Journal of Economics, Oxford University Press, vol. 95(3), pages 475-491.
    10. Chiarella, Carl, et al, 1984. "On the Economics of International Fisheries," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(1), pages 85-92, February.
    11. Amir, Rabah, 1996. "Continuous Stochastic Games of Capital Accumulation with Convex Transitions," Games and Economic Behavior, Elsevier, vol. 15(2), pages 111-131, August.
    12. Fischer, Ronald D. & Mirman, Leonard J., 1996. "The Compleat Fish Wars: Biological and Dynamic Interactions," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 34-42, January.
    13. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, March.
    14. Perry, Martin K, 1984. "Scale Economies, Imperfect Competition, and Public Policy," Journal of Industrial Economics, Wiley Blackwell, vol. 32(3), pages 313-333, March.
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    Citations

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    Cited by:

    1. AMIR, Rabah, 2001. "Stochastic games in economics and related fields: an overview," CORE Discussion Papers 2001060, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. David González-Sánchez & Onésimo Hernández-Lerma, 2014. "Dynamic Potential Games: The Discrete-Time Stochastic Case," Dynamic Games and Applications, Springer, vol. 4(3), pages 309-328, September.
    3. repec:spr:dyngam:v:8:y:2018:i:2:d:10.1007_s13235-017-0218-6 is not listed on IDEAS

    More about this item

    Keywords

    dynamic resource games; open and closed loop strategies; trigger strategies; Pareto optimality; regulation; Q20; C73; H41; Q22;

    JEL classification:

    • 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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