Regulating the tragedy of commons: Nonlinear feedback solutions of a differential game with a dual interpretation
2021
A well established dynamic model describing the impact of oligopolistic interaction
on a renewable resource is revisited here to illustrate its dual interpretation
as a waste removal differential game. The regulatory implications
are illustrated by assuming that the public agency may control market price
and possibly also access to the commons. Two different formulations of the
managerial or CSR objective are envisaged, based on a combination of profits
and either output or the individual share of the waste stock. It is shown that
if the representative firm’s objective includes the residual waste stock, there
exists a unique regulated price driving to zero the steady state stock itself.
Hence, the present analysis delivers some useful indications concerning an
appropriate definition of the CSR objective firms should adopt.
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