The commons dilemma: Strategic common pool resource extraction behavior

Résumé

Abstract The paper presents the strategic decision of common pool resource users at local level. Common pool resources typically characterized by the difficulty to exclude appropriation by others and the high level of rivalry (subtract ability). In this study, an application of game theory has been adopted to show individual resource use behavior. A game that better captures this underlying mechanism is the common pool resource game. Common pool resources with unlimited access are generally characterized by the existence of negative externality. Assuming a symmetric users’ payoff function, static analysis for a simple mathematical model using solution method for strategic common pool game come up with extraction effort levels exceed the socially optimal level at equilibrium. This implies that unregulated common pool resource game poses social dilemma; when players interact only once or finitely repeated. On the contrary, the infinitely repeated framework shows cooperation (socially optimal level of extraction) may sustain by a self-enforcing agreement provided individuals are sufficiently patient. This frame work indicates that cooperation may sustain for a long period of time, if the initial gain from deviation is small or losses from counter threat after deviation is large.

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