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Noncooperative Resource Exploitation by Patient Players

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  • Tapan Mitra
  • Gerhard Sorger

Abstract

We consider a discrete-time dynamic game in which a finite number of players extract a non-renewable resource and derive consumption solely from the extracted amount (cake-eating game). Markov perfect Nash equilibria consisting of linear strategies can be constructed in this game not only if the players have time-preference factors that are smaller than 1, but also if these factors are equal to or even larger than 1. We demonstrate this result both for the case of identical players and for the case of heterogeneous players. In addition, we study the influence of the model parameters on the equilibrium. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Tapan Mitra & Gerhard Sorger, 2015. "Noncooperative Resource Exploitation by Patient Players," Dynamic Games and Applications, Springer, vol. 5(3), pages 361-377, September.
    • Handle: RePEc:spr:dyngam:v:5:y:2015:i:3:p:361-377
    DOI: 10.1007/s13235-015-0135-5
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    More about this item

    Keywords

    Non-renewable resource; Common property resource; Dynamic game; Patient players; Markov perfect Nash equilibrium; C73; Q30;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General

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