Abstract

http://ssrn.com/abstract=1516655
 


 



Strategic Exploitation of a Common Resource under Environmental Risk


Eric Fesselmeyer


National University of Singapore (NUS) - Department of Economics

Marc Santugini


University of Virginia - Department of Economics


Journal of Economic Dynamics and Control, Vol. 37, No. 1, 2013

Abstract:     
We study the effect of environmental risk on the extraction of a common resource. Using a dynamic and non-cooperative game in which an environmental event impacts the renewability and the quality of the resource, we show that the anticipation of such an event has an ambiguous effect on extraction and the tragedy of the commons. A risk of a reduction in the renewability induces the agents to extract less today while a risk of a deterioration in the quality has the opposite effect. Moreover, when environmental risk induces conservation, the tragedy of the commons is worsened.

Keywords: Conservation, Dynamic games, Environmental risk, Renewable resources, Tragedy of the Commons

JEL Classification: C72, C73, D43, D90, L13, O13, Q20, Q54


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Date posted: December 3, 2009 ; Last revised: January 28, 2014

Suggested Citation

Fesselmeyer, Eric and Santugini, Marc, Strategic Exploitation of a Common Resource under Environmental Risk. Journal of Economic Dynamics and Control, Vol. 37, No. 1, 2013. Available at SSRN: http://ssrn.com/abstract=1516655 or http://dx.doi.org/10.2139/ssrn.1516655

Contact Information

Eric Fesselmeyer
National University of Singapore (NUS) - Department of Economics ( email )
1 Arts Link, AS2 #06-02
Singapore 117570, Singapore 119077
Singapore
Marc Santugini (Contact Author)
University of Virginia - Department of Economics ( email )
P.O. Box 400182
Charlottesville, VA 22904-4182
United States
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