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Sustainability or ruin of a common resource economy with random jump

Author

Listed:
  • Masatoshi Fujisaki

    (University of Hyogo, Japan)

  • Seiichi Katayama

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

  • Hiroshi Ohta

    (Graduate School of International Cooperation Studies, Kobe University, Japan)

Abstract

We consider a common resource economy in which agents exploit the common resource, and use it to produce goods and consume the goods produced. Also the agents can invest in private and productive capital. The resource extracted from the common resource is non-renewable and the common pool is under unceratinty in the sense that it could have a sudden increase or decrease in the course of extraction. In this model we shall explore the probability of sustainability or ruin of the economy. We compare and discuss the optimal extraction rules and the probabilities under cooperative and non-cooperative regimes.

Suggested Citation

  • Masatoshi Fujisaki & Seiichi Katayama & Hiroshi Ohta, 2005. "Sustainability or ruin of a common resource economy with random jump," Discussion Paper Series 178, Research Institute for Economics & Business Administration, Kobe University.
  • Handle: RePEc:kob:dpaper:178
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    File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp178.pdf
    File Function: First version, 2005
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    More about this item

    Keywords

    Common property resource; Private capital accumulation; Pure jump process; Exhaustion probability; HJB (Hamilton-Jacobi-Bellman) equation;

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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