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Wealth Sharing or Rights Sharing? Stable Coalitions in Resource Extraction on Networks

Author

Listed:
  • Silvia Faggian

    (Ca’ Foscari University of Venice)

  • Dominika Machowska

    (University of Warsaw)

  • Agnieszka Wiszniewska-Matyszkiel

    (University of Warsaw)

Abstract

This paper investigates the formation of stable coalitions in a differential game of resource extraction where players' resource deposits are interdependent and spatial relations between them are represented as a network. The network structure allows heterogeneity in the spatial distribution of extractable resources. We introduce a new framework for cooperative extraction in which, in addition to side payments, extraction rights can also be shared. The main contribution is the identification of conditions under which partial coalitions with more than three players can be stable, and under which the grand coalition can also be stable. Illustrative examples of such games are provided.

Suggested Citation

  • Silvia Faggian & Dominika Machowska & Agnieszka Wiszniewska-Matyszkiel, 2025. "Wealth Sharing or Rights Sharing? Stable Coalitions in Resource Extraction on Networks," Working Papers 2025: 18, Department of Economics, University of Venice "Ca' Foscari".
    • Handle: RePEc:ven:wpaper:2025:18
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    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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