The road to extinction: commons with capital markets

Colin Rowat and Jayasri Dutta ()

No 145, Econometric Society 2004 North American Summer Meetings from Econometric Society

Abstract: Competitive agents extract in continuous time from a commons. Capital market access allows them to both save and borrow against their extraction stream. When the commons asset grows more quickly than the privately stored one, multiple equilibria are found for intermediate commons endowments. One of these has the extinction date and welfare decrease in the endowment, a resource curse. When the commons asset grows less quickly than the privately stored one, there is a unique extinction date for each endowment level. In the limit, as marginal extraction costs become constant, `jump extinctions' occur. In cases with multiple equilibria: welfare is increased for low initial stock levels when agents do not have access to capital markets, but decreased otherwise; and an extraction tax reduces welfare in the `cursed' equilibrium, increases it in the other finite extinction equilibrium and expands the set of commons stocks that are never extinguished

Keywords: commons; capital markets; extinction; resource curse; storage; multiple equilibrium; rational expectations equilibrium (search for similar items in EconPapers)
JEL-codes: C73 D91 O17 (search for similar items in EconPapers)
Date: 2004-08-11
New Economics Papers: this item is included in nep-fin
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://repec.org/esNASM04/up.13164.1074782099.pdf (application/pdf)

Related works:
Working Paper: The Road to Extinction: Commons with Capital Markets (2007)
Working Paper: The Road to Extinction: Commons with Capital Markets (2007)
Working Paper: The road to extinction: Commons with Capital Markets (2005)
Working Paper: The Road to Extinction: Commons with Capital Markets (2004)
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: https://EconPapers.repec.org/RePEc:ecm:nasm04:145

Access Statistics for this paper

More papers in Econometric Society 2004 North American Summer Meetings from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Christopher F. Baum ().