Do Increases in Risk Mitigate the Tragedy of the Commons?
Hassan Benchekroun () and
Strategic Behavior and the Environment, 2014, vol. 4, issue 1, 1-14
We consider the effect of an increase in the risk from pollution. We show that in the case of a flow pollution, when the number of players is sufficiently large, the result of Bramoulle and Treich [ Journal of the European Economic Association , 2009], showing that a marginal increase of risk in the neighborhood of a risk-free world is welfare-improving, holds even when we consider non-marginal increases in risk and for any initial values of the risk. By contrast, in the case of a stock pollutant, we show that starting in a risk-free world a marginal increase in risk is always welfare reducing. However if the initial value of the risk is sufficiently large, the impact of an increase in risk depends on the level of the stock pollutant. In this non-negligible risk case, it is only for values of the stock of pollution that are below a certain threshold that an increase in risk can mitigate the failure from cooperation over emissions and increase welfare.
Keywords: Tragedy of the commons; transboundary pollution; uncertainty; risk; differential games (search for similar items in EconPapers)
JEL-codes: C73 Q50 D80 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:now:jnlsbe:102.00000041
Access Statistics for this article
More articles in Strategic Behavior and the Environment from now publishers
Bibliographic data for series maintained by Alet Heezemans ().