Dynamic Games in the Economics of Natural Resources: A Survey

This article provides a comprehensive survey of models of dynamic games in the exploitation of renewable and exhaustible resources. It includes dynamic games at the industry level (oligopoly, cartel versus fringe, tragedy of the commons) and at the international level (tariffs on exhaustible resources, fish wars, entry deterrence). Among more recent topics are international strategic issues involving the link between resource uses and transboundary pollution, the design of taxation to ensure efficient outcomes under symmetric and asymmetric information, the rivalry among factions in countries where property rights on natural resources are not well established. Various extensions are considered, such as (i) modeling the effects of the concern for relative performance (relative income, relative consumption, and social status) on the over-exploitation of resources, (ii) applying the tragedy of the commons paradigm to the declining effectiveness of antibiotics and pesticides. Outcomes under Nash equilibria and Stackelberg equilibria are compared. The paper ends with some suggestions for future research.