Strategic exploitation of a common-property resource under uncertainty

Elena Antoniadou, Christos Koulovatianos*, Leonard J. Mirman

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    28 Citations (Scopus)

    Abstract

    We construct a game of noncooperative common-resource exploitation which delivers analytical solutions for its symmetric Markov-perfect Nash equilibrium. We examine how introducing uncertainty to the natural law of resource reproduction affects strategic exploitation. We show that the commons problem is always present in our example and we identify cases in which increases in risk amplify or mitigate the commons problem. For a specific class of games which imply Markov-perfect strategies that are linear in the resource stock (our example belongs to this class), we provide general results on how payoff-function features affect the responsiveness of exploitation strategies to changes in riskiness. These broader characterizations of games which imply linear strategies (appearing in an Online Appendix) can be useful in future work, given the technical difficulties that may arise from the possible nonlinearity of Markov-perfect strategies in more general settings.

    Original languageEnglish
    Pages (from-to)28-39
    Number of pages12
    JournalJournal of Environmental Economics and Management
    Volume65
    Issue number1
    DOIs
    Publication statusPublished - Jan 2013

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