journal article Apr 22, 2014

Do Increases in Risk Mitigate the Tragedy of the Commons?

View at Publisher Save 10.1561/102.00000041
Abstract
We consider the effect of an increase in the risk from pollution. We show that in the case of a flow pollution, when the number of players is sufficiently large, the result of Bramoulle and Treich [Journal of the European Economic Association, 2009], showing that a marginal increase of risk in the neighborhood of a risk-free world is welfare-improving, holds even when we consider non-marginal increases in risk and for any initial values of the risk. By contrast, in the case of a stock pollutant, we show that starting in a risk-free world a marginal increase in risk is always welfare reducing. However if the initial value of the risk is sufficiently large, the impact of an increase in risk depends on the level of the stock pollutant. In this non-negligible risk case, it is only for values of the stock of pollution that are below a certain threshold that an increase in risk can mitigate the failure from cooperation over emissions and increase welfare.
Topics

No keywords indexed for this article. Browse by subject →

References
9
[1]
Athanassoglou "Dynamic Nonpoint Source Pollution Control Policy: Ambient Transfer and Uncertainty." Journal of Economic Dynamics and Control (2010) 10.1016/j.jedc.2010.07.004
[2]
Athanassoglou "Pollution Control with Uncertain Stock Dynamics: When, and How, to be Precautious." Journal of Environmental Economics and Management (2012) 10.1016/j.jeem.2011.11.001
[3]
Unilateral production restrictions in a dynamic duopoly

Hassan Benchekroun

Journal of Economic Theory 2003 10.1016/s0022-0531(03)00090-5
[4]
Comparative dynamics in a productive asset oligopoly

Hassan Benchekroun

Journal of Economic Theory 2008 10.1016/j.jet.2006.10.012
[5]
Bramoulle "Can Uncertainty Alleviate the Commons Problem?" Journal of the European Economic Association (2009) 10.1162/jeea.2009.7.5.1042
[6]
Dockner Differential Games In Economics and Management Science (2000) 10.1017/cbo9780511805127
[7]
Dockner "International Pollution Control: Cooperative versus Noncooperative Strategies." Journal of Environmental Economics and Management (1993) 10.1006/jeem.1993.1023
[8]
Ferhstman "Dynamic Duopolistic Competition with Sticky Prices." Econometrica (1987) 10.2307/1911265
[9]
Sandler "Harvest Uncertainty and the Tragedy of the Commons." Journal of Environmental Economics and Management (1990) 10.1016/0095-0696(90)90045-z
Metrics
8
Citations
9
References
Details
Published
Apr 22, 2014
Vol/Issue
4(1)
Pages
1-14
Cite This Article
Hassan Benchekroun, Ngo Van Long (2014). Do Increases in Risk Mitigate the Tragedy of the Commons?. Strategic Behavior and the Environment, 4(1), 1-14. https://doi.org/10.1561/102.00000041