The Double Curse of a Common Property Productive Asset Oligopoly

Hassan Benchekroun

Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ

Abstract: We build a subgame perfect Nash equilibrium of a common property productive asset oligopoly. We derive two surprising results. First, the steady state level of asset can be a decreasing function of the asset’s implicit growth rate. This phenomenon arises when the initial stock of asset is below a certain threshold. It represents a double curse for a common property productive asset where the well-known tragedy of the commons due to a lack of property rights is exacerbated by an increase in the productivity of the asset. Second, we show that a reduction in the number of firms exploiting the asset can, in the short run, result in an increase of the industry’s exploitation and a decrease of the level of the asset’s stock.

Keywords: productive asset; oligopoly; tragedy of the commons; dynamic games (search for similar items in EconPapers)
JEL-codes: C73 D43 L13 Q34 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2005
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Related works:
Journal Article: Comparative dynamics in a productive asset oligopoly (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:mtl:montec:02-2005

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