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Policy effectiveness in spatial resource wars: A two-region model

Author

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  • Giorgio Fabbri

    (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes)

  • Silvia Faggian

    (University of Ca’ Foscari [Venice, Italy])

  • Giuseppe Freni

    (PARTHENOPE - Università degli Studi di Napoli “Parthenope” = University of Naples)

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, 2020. "Policy effectiveness in spatial resource wars: A two-region model," Post-Print halshs-03038871, HAL.
    • Handle: RePEc:hal:journl:halshs-03038871
    DOI: 10.1016/j.jedc.2019.103818
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03038871
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    Cited by:

    1. Giorgio Fabbri & Silvia Faggian & Giuseppe Freni, 2022. "On competition for spatially distributed resources in networks: an extended version," Working Papers 2022:03, Department of Economics, University of Venice "Ca' Foscari".
    2. Fabbri, Giorgio & Faggian, Silvia & Freni, Giuseppe, 0. "On competition for spatially distributed resources in networks," Theoretical Economics, Econometric Society.

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    More about this item

    Keywords

    Environmental protection policies; Markov perfect equilibrium; Spatial harvesting problems; Differential games;
    All these keywords.

    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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