Wealth Sharing or Rights Sharing? Stable Coalitions in Resource Extraction on Networks

Silvia Faggian (), Dominika Machowska and Agnieszka Wiszniewska-Matyszkiel
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Silvia Faggian: Ca’ Foscari University of Venice
Dominika Machowska: University of Warsaw
Agnieszka Wiszniewska-Matyszkiel: University of Warsaw

No 2025: 18, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: This paper investigates the formation of stable coalitions in a differential game of resource extraction where players' resource deposits are interdependent and spatial relations between them are represented as a network. The network structure allows heterogeneity in the spatial distribution of extractable resources. We introduce a new framework for cooperative extraction in which, in addition to side payments, extraction rights can also be shared. The main contribution is the identification of conditions under which partial coalitions with more than three players can be stable, and under which the grand coalition can also be stable. Illustrative examples of such games are provided.

Keywords: resource extraction; network; the tragedy of the commons; cooperation; partial cooperation; stability of coalitions (search for similar items in EconPapers)
JEL-codes: C61 C71 C72 C73 D85 Q20 Q21 Q30 Q32 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2025
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