Information structure and the tragedy of the commons in resource extraction

Rabah AMIR and Niels NANNERUP

No 2004040, CORE Discussion Papers from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper considers the well-known Levhari-Mirman 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. 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. The level of efficiency of equilibrium behaviour is thus U-shaped as a function of the level of information 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.

Keywords: dynamic resource games; open-loop; closed-loop and trigger strategies; Pareto optimality; regulation (search for similar items in EconPapers)
JEL-codes: Q20 C73 (search for similar items in EconPapers)
Date: 2004-06-01
View list of references

Downloads: (external link)
http://www.core.ucl.ac.be/services/psfiles/dp04/dp2004_40.pdf (application/pdf)

Related works:
Working Paper: Information Structure and the Tragedy of the Commons in Resource Extraction (2000)
Journal Article: Information Structure and the Tragedy of the Commons in Resource Extraction (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cor:louvco:2004040

Access Statistics for this paper

More papers in CORE Discussion Papers from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)
Address: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)
Contact information at EDIRC.
Series data maintained by Alain GILLIS ().