The core of an economy with a common pool resource: A partition function form approach |
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Authors: | Yukihiko Funaki Takehiko Yamato |
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Institution: | (1) School of Political Science and Economics, Waseda University, 1-6-1 Nishi-Waseda, Shinjuku-ku, Tokyo 169-8050, Japan (e-mail: funaki@mn.waseda.ac.jp), JP;(2) Faculty of Economics, Tokyo Metropolitan University, Hachioji, Tokyo 192-0397, Japan (e-mail: yamato-takehiko@c.metro-u.ac.jp), JP |
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Abstract: | In this paper we consider a model of an economy with a common pool resource. Under decreasing returns to scale, it is well-known
that no Nash equilibrium attains Pareto efficiency. We examine whether it is possible to achieve Pareto efficiency and avoid
the tragedy of the commons through cooperation among players. For that purpose, we use the notion of a game in partition function
form. Whether or not the core exists depends crucially on the expectations of each coalition regarding the coalition formation
of the outsiders. If each coalition has pessimistic expectations, then the core always exists, while if it has optimistic
expectations, the core may be empty.
Received: January 1998/Final version: November 1998 |
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Keywords: | : Tragedy of the commons partition function form core |
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