Game Practice and the Environment
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Game Practice and the Environment

  • The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development

Edited by Carlo Carraro and Vito Fragnelli

This book summarises the latest achievements of researchers involved in the application of game theory to the analysis of environmental matters. It provides an overview of different methods and applications, and gives the reader new insights on the solutions to complex environmental problems. The authors investigate various game theoretic approaches, including cooperative and non-cooperative game theory, and analyse both dynamic and static games. They illustrate the application of these approaches to global and local environmental problems, and present novel but effective tools to support environmental policy making. In particular, they focus on three important issues; climate negotiations and policy, the sharing of environmental costs, and environmental management and pollution control.
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Chapter 9: Competition and Cooperation in Natural Resources Exploitation: An Evolutionary Game Approach

Gian Italo Bischi, Fabio Lamantia and Lucia Sbragia

Extract

9. Competition and cooperation in natural resources exploitation: an evolutionary game approach Gian Italo Bischi, Fabio Lamantia and Lucia Sbragia 1. INTRODUCTION Since the pioneering work of Gordon (1954), many bioeconomic models for the description of the commercial exploitation of common property renewable resources, such as fisheries, have stressed the problem known as ‘the tragedy of the commons’ (Hardin, 1968; see also Clark, 1990). This problem can be basically identified with a prisoner’s dilemma (see for example, Mesterton-Gibbons, 1993) because the presence of firms playing their dominant strategy which maximizes their own profit (disregarding competitors’ profits) leads to severe depletion of the resource, and consequently to low profits for all. On the other hand if firms cooperate to maximize total profits, then sustainable exploitation is more likely to obtain, which implies higher profits for all in the long run. However, unilateral defection, that is, the decision of an agent to harvest intensively while the other players harvest moderately in order to preserve resources, may lead to very high profits for the defector, and consequently to severe profit loss for the cooperators. This is the essence of the tragedy of the commons, often advanced in order to support the introduction of sanctions against defectors and/or restrictions to open access to common property resources. Dynamic models based on Cournot oligopoly games have been proposed by Levhari and Mirman (1982) and, more recently, by Szidarovszky and Okuguchi (1998, 2000), to describe commercial fishing. In these...

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