Investment and the tragedy of the commons

Economics Bulletin, 2001, vol. 4, pages 1-6

Abstract: This note studies the exploitation of a common proerty resource when firms choose a technology before exploiting the resource. The sequential choice leads to overinvestment. Moreover, exploitation levels are higher than they would be if technology and labour input were chosen simultaneously. The tragedy of the commons is aggravated.

Keywords: common property resources; sequential investment (search for similar items in EconPapers)
JEL-codes: D6 Q2 (search for similar items in EconPapers)
Date: 2001 Written 2001-03-19
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