Dynamic cournot-competitive harvesting of a common pool resource

Abstract

A variant of the classical harvesting game, where a number of competing agents simultaneously harvest a common-pool natural resource, is analysed. The harvesting at each time is a Cournot competition. The critical assumption made in the present analysis is that most (or all) individual participants maintain a perspective which is wholly myopic. Three cases are analysed: 1) The case of aggressive myopic Cournot competition. 2) co-operation and 3) competition when there is an incumbent player. The development in the number of active participants is outlined, and stability criteria for a dynamic Cournot-competitive game are given. The exact deadweight loss due to lack of co-operation is calculated.