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Policy Effectiveness In Spatial Resource Wars: A Two-Region Model

Author

Listed:
  • GIORGIO FABBRI

    () (Univ. Grenoble Alpes, CNRS)

  • SILVIA FAGGIAN

    () (Department of Economics, Ca' Foscari University of Venice, Italy)

  • GIUSEPPE FRENI

    () (Department of Business and Economics, Parthenope University of Naples, Italy)

Abstract

We develop a spatial resource model in continuous time in which two agents/players strategically exploit a mobile resource in a two-region setup. To counteract the overexploitation of the resource (the tragedy of commons) that occurs when players are free to choose where to fish/hunt/extract/harvest, the regulator can establish a series of spatially structured policies. We compare the equilibria in the case of a common resource with those that emerge when the regulator either creates a natural reserve, or assigns Territorial User Rights to the players. We show that, when the discount rate is close to its \critical value", i.e. when technological and preference parameters dictate a low harvesting intensity/effort, the policies are ineffective in promoting the conservation of the resource and, in addition, they lead to a lower payoff for at least one of the players. Conversely, in a context of harsher harvesting intensity, the intervention can help to safeguard the resource, preventing extinction while also improving the welfare of both players.

Suggested Citation

  • Giorgio Fabbri & Silvia Faggian & Giuseppe Freni, 2019. "Policy Effectiveness In Spatial Resource Wars: A Two-Region Model," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2019012, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvir:2019012
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    References listed on IDEAS

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    More about this item

    Keywords

    Spatial harvesting problems; Markov perfect equilibrium; Environmental protection policies; Differential Games;

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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