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Do Increases in Risk Mitigate the Tragedy of the Commons?

Author

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  • Benchekroun, Hassan
  • Long, Ngo Van

Abstract

We consider the effect of an increase in the risk from pollution. We show that in the case of a flow pollution, when the number of players is sufficiently large, the result of Bramoulle and Treich [ Journal of the European Economic Association , 2009], showing that a marginal increase of risk in the neighborhood of a risk-free world is welfare-improving, holds even when we consider non-marginal increases in risk and for any initial values of the risk. By contrast, in the case of a stock pollutant, we show that starting in a risk-free world a marginal increase in risk is always welfare reducing. However if the initial value of the risk is sufficiently large, the impact of an increase in risk depends on the level of the stock pollutant. In this non-negligible risk case, it is only for values of the stock of pollution that are below a certain threshold that an increase in risk can mitigate the failure from cooperation over emissions and increase welfare.

Suggested Citation

  • Benchekroun, Hassan & Long, Ngo Van, 2014. "Do Increases in Risk Mitigate the Tragedy of the Commons?," Strategic Behavior and the Environment, now publishers, vol. 4(1), pages 1-14, April.
    • Handle: RePEc:now:jnlsbe:102.00000041
    DOI: 10.1561/102.00000041
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    Citations

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    Cited by:

    1. Fouad El Ouardighi & Hassan Benchekroun & Dieter Grass, 2016. "Self-regenerating environmental absorption efficiency and the $$\varvec{ soylent~green~scenario}$$ s o y l e n t g r e e n s c e n a r i o," Annals of Operations Research, Springer, vol. 238(1), pages 179-198, March.
    2. Nkuiya, Bruno, 2015. "Transboundary pollution game with potential shift in damages," Journal of Environmental Economics and Management, Elsevier, vol. 72(C), pages 1-14.

    More about this item

    Keywords

    Tragedy of the commons; transboundary pollution; uncertainty; risk; differential games;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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