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POLICY EFFECTIVENESS IN SPATIAL RESOURCE WARS: A TWO-REGION MODEL

Giorgio Fabbri (), Silvia Faggian () and Giuseppe Freni ()
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Silvia Faggian: Department of Economics, Ca' Foscari University of Venice, Italy

No 2019012, Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: We develop a spatial resource model in continuous time in which two agents/players strategically exploit a mobile resource in a two-region setup. To counteract the overexploitation of the resource (the tragedy of commons) that occurs when players are free to choose where to fish/hunt/extract/harvest, the regulator can establish a series of spatially structured policies. We compare the equilibria in the case of a common resource with those that emerge when the regulator either creates a natural reserve, or assigns Territorial User Rights to the players. We show that, when the discount rate is close to its \critical value", i.e. when technological and preference parameters dictate a low harvesting intensity/effort, the policies are ineffective in promoting the conservation of the resource and, in addition, they lead to a lower payoff for at least one of the players. Conversely, in a context of harsher harvesting intensity, the intervention can help to safeguard the resource, preventing extinction while also improving the welfare of both players.

Keywords: Spatial harvesting problems; Markov perfect equilibrium; Environmental protection policies; Differential Games (search for similar items in EconPapers)
JEL-codes: Q28 C72 Q23 C61 R12 (search for similar items in EconPapers)
Date: 2019-06-06
New Economics Papers: this item is included in nep-env and nep-gth
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