Working Paper: NBER ID: w18519
Authors: Brd Harstad; Matti Liski
Abstract: This article presents a sequence of simple and related models to analyze the strategic use of natural resources. Game theory is the natural tool for such an analysis, whether the resource is private or publicly owned, whether it is renewable or exhaustible, whether the game is static or dynamic, and whether or not the users can strategically invest in technologies. Equilibrium extraction is too large and comes too early for public resources, but the opposite is true for private resources. The effects add up nicely when the resource has both private and public-good aspects.
Keywords: Game theory; Natural resources; Environmental economics; Resource management
JEL Codes: C7; H7
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Publicly owned resources (L32) | excessive extraction (L72) |
| Users ignoring negative externalities (D62) | excessive extraction (L72) |
| Privately owned resources (P14) | conservative extraction (Q30) |
| Owners seeking to maximize prices (D40) | conservative extraction (Q30) |
| Users' strategic investments in technology (O33) | extraction rates (L72) |
| Dynamic common-pool problems (C62) | inefficient intertemporal allocation (D15) |
| Privately owned resources (P14) | strategic extraction behavior (C70) |
| Interaction between public and private resources (H44) | inefficient outcomes (D61) |