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A Ricardian Model of the Tragedy of the Commons

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Type: Conference Paper
Author: Lasserre, Pierre; Soubeyran, Antoine
Conference: Property Rights, Institutions, and Management of Environmental and Natural Resources, the Fourth Toulouse Conference on Environment and Resource Economics
Location: Toulouse, France
Conf. Date: May 3-4
Date: 2001
URI: https://hdl.handle.net/10535/8045
Sector: Theory
Subject(s): tragedy of the commons
game theory
bounded rationality
property rights--theory
common pool resources--models
Abstract: "This paper revisits the tragedy of the commons when agents have different capabilities in both production and encroachment activities, and can allocate their time between them. Under fairly general assumptions on production and encroachment technologies, an individual's expected income is convex with respect to his actions so that individuals specialize. Consequently, in equilibrium, the economy is divided into at most two homogenous groups: encroachers and producers. The partition obeys a relative advantage criterion. Several equilibria may may exist. The 'tragedy of the commons' equilibrium without production always does; the Pareto optimal allocation of activities may not be an equilibrium. We show that minute changes in property right enforcement may lead to drastic improvements for society. We argue that, in convex games such as this paper's role choice game, bounded rationality is a natural assumption, and the concept of local Nash equilibrium is the natural analytical tool to handle it."

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