Do Increases in Risk Mitigate the Tragedy of the Commons?

Hassan Benchekroun; Ngo Van Long

doi:10.1561/102.00000041

journal article Apr 22, 2014

Do Increases in Risk Mitigate the Tragedy of the Commons?

Hassan Benchekroun Ngo Van Long

Strategic Behavior and the Environment Vol. 4 No. 1 pp. 1-14 · Emerald

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.

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Details

Published: Apr 22, 2014
Vol/Issue: 4(1)
Pages: 1-14

Authors

H

Hassan Benchekroun

McGill University Department of Economics, CIREQ,

N

Ngo Van Long

McGill University Department of Economics, CIREQ,

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

Do Increases in Risk Mitigate the Tragedy of the Commons?

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