Journal article
Information Structure and the Tragedy of the Commons in Resource Extraction
Journal of bioeconomics, Vol.8(2), pp.147-165
08/2006
DOI: 10.1007/s10818-006-9001-2
Abstract
This paper considers the well-known Levhari-Mirman discrete-time model of resource extraction, and investigates the effects of the information structure of the dynamic game--open-loop, Markovian or history-dependent--on the equilibrium consumption path and the overall utility of the agents. Due to the special structure of the model, the open-loop regime yields a Pareto-optimal outcome. The Markovian regime leads to the most pronounced version of the tragedy of the commons. History-dependent behavior yields an outcome set that is intermediate between the other two cases, and that may include the Pareto-optimal outcome in some cases. The level of efficiency of equilibrium behaviour is thus U-shaped as a function of the level of information the agents' extraction strategies are based on. The analysis suggests that in environments characterized by a dynamic (and no market) externality, forcing agents to commit to open-loop behavior would constitute welfare-improving regulation.
Details
- Title: Subtitle
- Information Structure and the Tragedy of the Commons in Resource Extraction
- Creators
- Rabah Amir - KU LeuvenNiels Nannerup
- Resource Type
- Journal article
- Publication Details
- Journal of bioeconomics, Vol.8(2), pp.147-165
- DOI
- 10.1007/s10818-006-9001-2
- ISSN
- 1387-6996
- eISSN
- 1573-6989
- Language
- English
- Date published
- 08/2006
- Academic Unit
- Economics
- Record Identifier
- 9984380492902771
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