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Wiley InterScience | ||||||||
  International Journal of Economic TheoryVolume 1 Issue 1, Pages 3 - 19 Published Online: 17 Feb 2005 © 2009 The International Association for Economic Theory
Abstract | References | Full Text: PDF (Size: 193K) | Related Articles | Citation Tracking  A dynamic common property resource problem with amenity value and extraction costs Helpful comments by Ngo Van Long and an anonymous referee are greatly appreciated. Copyright 2005 The International Society for Economic Theory. KEYWORDS tragedy of the commons • Markov-perfect Nash equilibrium • unilateral extraction restriction • corrective tax/transfer scheme KEYWORDS C73 • Q20 • Q28 ABSTRACTAn analytically tractable differential game is presented that describes the exploitation of a common-property resource by finitely many competing players. The resource stock has an amenity value and there are positive extraction costs. We derive both the cooperative solution and Markov-perfect Nash equilibria of the non-cooperative game. After a comparative analysis of the equilibrium strategies and payoffs with respect to all model parameters, we study the effect of a unilateral extraction restriction and discuss the design of a revenue-neutral tax/transfer scheme that supports the cooperative solution. Accepted 29 June 2004 | 
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