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A Duopoly with Common Renewable Resource and Incentives

Luca Grilli () and Michele Bisceglia
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Michele Bisceglia: Dipartimento di Scienze Aziendali, Economiche e Metodi Quantitativi, Università Degli Studi di Bergamo, Via dei Caniana, 2 24127 Bergamo, Italy

International Game Theory Review (IGTR), 2017, vol. 19, issue 04, 1-20

Abstract: In this paper, we study a duopoly model in which two symmetric firms exploit the same public renewable resource as an input for the production of a homogeneous good. We consider the case where the firms are provided with public incentives in order to prevent the resource exhaustion in a finite time horizon which coincides with the harvesting-license period. As a consequence, we consider a differential game in finite time horizon and compute the Open Loop and linear Feedback Nash Equilibria of the game. We study the social welfare and the optimal incentives polices derived from the solutions.

Keywords: Open Loop Nash Equilibrium; Feedback Nash Equilibrium; resource extraction; finite time horizon; incentives (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1142/S0219198917500189

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