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The Commons With Capital Markets

Author

Listed:
  • Colin Rowat

    (Department of Economic University of Birmingham)

  • Jaysari Dutta

    (Department of Economic University of Birmingham)

Abstract

We explore common problems when agents have access to capital markets.The commons has a high intrinsic rate of return but its fruits cannot be secured by individual agents.Resources transferred to the capital market earn lower retuns, but are secure.In a two period modeel, we assess the consequences of market access for the commons survival and welfare we compare strategic and competitive equilibria.Market access generally speeds extinction, with negative welfare consequences.Against this, it allows intertemporal smoothing, a positive effect.In societies in which the former ctfect dominates, marker liberalization may be harmful.We reproduce the multiple equilibria found in other models of competitive agents, when agents are strategic, extinction dates are unique.Strategic agentsS generally carn their surplus by delaying the commons extinction, in unusual cases, strategic agents behave as competitive ones even when thcir numbers are small.

Suggested Citation

  • Colin Rowat & Jaysari Dutta, 2005. "The Commons With Capital Markets," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 1(2), pages 167-186.
    • Handle: RePEc:aib:ibtjbs:v:1:y:2005:i:2:p:167-186
    DOI: https://doi.org/10.46745/ilma.ibtjbs.2005.12.4
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