Complexities in Common Property

36 Pages Posted: 23 Nov 2003

See all articles by Andrew B. Miller

Andrew B. Miller

Chicago Partners; New York University - Department of Economics

Date Written: November 21, 2003

Abstract

In an optimal growth setting, where the only productive asset is a renewable resource which is jointly exploited, it is shown that competitively the resource may be over-used or under-used. The diversion from optimal use arises due to the externality embodied in the jointness of exploitation and would intuit over-use. Surprisingly, under-use has been derived as an equilibrium phenomenon by Dutta and Sundaram [93] when agents strategically interact in a dynamic game. However, as is shown here, strategic interaction is not necessary. The phenomenon of under-use may arise within a perfectly competitive model due to complicated dyamic behavior and when agents are patient relative to the growth of the renewable resource.

Keywords: externality, renewable resource, optimal growth, dynamic, tragedy of the commons

JEL Classification: D6, H4, Q2

Suggested Citation

Miller, Andrew Bowman, Complexities in Common Property (November 21, 2003). Available at SSRN: https://ssrn.com/abstract=471881. or http://dx.doi.org/10.2139/ssrn.471881

Andrew Bowman Miller (Contact Author)

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