Sustaining environmental resilience: A Stackelberg game

George Halkos and George Papageorgiou

MPRA Paper from University Library of Munich, Germany

Abstract: This paper develops a dynamic Stackelberg game between a social planner and a resource-extracting firm to analyze the regulation of renewable resource extraction. The planner, as leader, sets extraction quotas, while the firm, as follower, chooses its extraction effort in response. The model is analyzed under exponential resource growth and compares open-loop (pre-committed) and feedback (state-dependent) equilibrium strategies. We show that open-loop equilibria yield environmentally unstable steady states. Stability can be achieved only under feedback strategies, and only when the follower’s valuation of the resource stock is sufficiently sensitive - a condition met under a quadratic value function. A state-dependent tax is further shown to enhance stability by strengthening the corrective feedback between ecological conditions and extraction incentives. The results highlight the limits of static regulation, underscore the critical role of adaptive, feedback-based policies, and provide a formal argument for precautionary and responsive governance in achieving long-run resource sustainability.

Keywords: Differential games; environmental degradation; exponential growth; logistic growth; sustainable growth; Stackelberg game. (search for similar items in EconPapers)
JEL-codes: C61 C62 C72 H23 H32 H62 Q50 Q52 Q53 Q56 (search for similar items in EconPapers)
Date: 2026-01-15
References: Add references at CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/127745/1/MPRA_paper_127745.pdf original version (application/pdf)

Related works:
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:pra:mprapa:127745

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().