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Spatial resource wars: A two region example

Giorgio Fabbri (), Silvia Faggian () and Giuseppe Freni ()

Working Papers from Grenoble Applied Economics Laboratory (GAEL)

Abstract: We develop a spatial resource model in continuous time in which two agents strategically exploit a mobile resource in a two-location setup. In order to contrast the overexploitation of the resource (the tragedy of commons) that occurs when the player are free to choose where to fish/hunt/extract/harvest, the regulator can establish a series of spatially structured policies. We compare the three situations in which the regulator: (a) leaves the player free to choose where to harvest; (b) establishes a natural reserve where nobody is allowed to harvest; (c) assigns to each player a specific exclusive location to hunt. We show that when preference parameters dictate a low harvesting intensity, the policies cannot mitigate the overexploitation and in addition they worsen the utilities of the players. Conversely, in a context of harsher harvesting intensity, the intervention can help to safeguard the resource, preventing the extinction and 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)
New Economics Papers: this item is included in nep-env and nep-gth
Date: 2018
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