A dynamic common-property resource problem with potential regime shifts
Discussion papers from Graduate School of Economics Project Center, Kyoto University
This paper provides a general framework with which a dynamic problem with potential regime shifts can be analyzed in a strategic environment as well as from social planner’s perspective. A typical situation described by such a game is the joint exploitation of a common-property resource such as lakes, forests, marine fish populations, and at a larger scale the global climate system. By applying the framework to a simple dynamic common-property resource problem, we show that when the risk is endogenous, potential of regime shifts can facilitate precautionary management of common-property resources even in a strategic environment. It is also shown that there exists a resource-depletion trap in which a regime shift, once it happens, triggers a reversal of resource accumulation dynamics, possibly leading to a collapse of resource base.
Keywords: Regime shift; Markov-perfect Nash equilibrium; common-property resource; tragedy of the commons (search for similar items in EconPapers)
JEL-codes: C72 C73 Q20 (search for similar items in EconPapers)
Pages: 26 pages
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Journal Article: Dynamic resource management under the risk of regime shifts (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:kue:dpaper:e-12-012
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