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.
Original language | English |
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Pages (from-to) | 157-171 |
Number of pages | 15 |
Journal | International Journal of Game Theory |
Volume | 28 |
Issue number | 2 |
DOIs | |
Publication status | Published - 1999 May |
Keywords
- Core
- Partition function form
- Tragedy of the commons
ASJC Scopus subject areas
- Statistics and Probability
- Mathematics (miscellaneous)
- Social Sciences (miscellaneous)
- Economics and Econometrics
- Statistics, Probability and Uncertainty