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Tragedy of the Commons in a Stochastic Game of a Stock Externality

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  • FRANZ WIRL

Abstract

This paper investigates a tragedy of the commons where an Ito‐process traces the accumulation of pollution and differentiates between reversible (i.e., clean up is feasible) and irreversible emissions (past pollution cannot be undone). The reversible case allows for an explicit analytical solution, while other means are necessary to characterize irreversible outcomes. More precisely, a different characterization of equilibria (in Markov strategies) as smooth connections between an initial and a stopping manifold is suggested.

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  • Franz Wirl, 2008. "Tragedy of the Commons in a Stochastic Game of a Stock Externality," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(1), pages 99-124, February.
    • Handle: RePEc:bla:jpbect:v:10:y:2008:i:1:p:99-124
    DOI: 10.1111/j.1467-9779.2008.00353.x
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    Cited by:

    1. Tolotti, Marco & Yepez, Jorge, 2020. "Hotelling-Bertrand duopoly competition under firm-specific network effects," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 105-128.
    2. Zemel, Amos, 2015. "Adaptation, mitigation and risk: An analytic approach," Journal of Economic Dynamics and Control, Elsevier, vol. 51(C), pages 133-147.
    3. Fulvio Fontini & Katrin Millock & Michele Moretto, 2018. "Collective reputation with stochastic production and unknown willingness to pay for quality," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(2), pages 387-410, April.
    4. Zemel, Amos, 2012. "Precaution under mixed uncertainty: Implications for environmental management," Resource and Energy Economics, Elsevier, vol. 34(2), pages 188-197.
    5. Guennady Ougolnitsky & Anatoly Usov, 2019. "Spatially Distributed Differential Game Theoretic Model of Fisheries," Mathematics, MDPI, vol. 7(8), pages 1-13, August.
    6. Caleb M. Koch & Heinrich H. Nax, 2022. "Groundwater Usage and Strategic Complements: Part I (Instrumental Variables)," Games, MDPI, vol. 13(5), pages 1-19, October.
    7. Anjos, Miguel F. & Feijoo, Felipe & Sankaranarayanan, Sriram, 2022. "A multinational carbon-credit market integrating distinct national carbon allowance strategies," Applied Energy, Elsevier, vol. 319(C).
    8. N. Baris Vardar & Georges Zaccour, 2020. "Exploitation of a Productive Asset in the Presence of Strategic Behavior and Pollution Externalities," Mathematics, MDPI, vol. 8(10), pages 1-28, October.

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