40 research outputs found
Managerial delegation in a dynamic renewable resource oligopoly
I propose a differential oligopoly game of resource extraction under (quasi-static) open-loop and nonlinear feedback strategies, where firms are managerial and two alternative types of delegation contract are considered. Under open-loop information, delegation expands the residual steady state resource stock. Conversely, under nonlinear feedback information the outcome depends on the structure of managerial incentives. If sales are used, once again delegation favours resource preservation. On the contrary, if market shares are included in the delegation contract, this combines with an underlying voracity effect in shrinking the steady state volume of the resource
Spatial resource wars: A two region example
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