Abstract
A tragedy of commons appears when the users of a common resource have incentives to exploit it more than the socially efficient level. We analyze the situation when the tragedy of commons is embedded in a network of users and sources. Users play a game of extractions, where they decide how much resource to draw from each source they are connected to. We show that the network structure matters. The exploitation at each source depends on the centrality of the links connecting the source to the users. The equilibrium is unique and we provide a formula which expresses the quantities at an equilibrium as a function of a network centrality measure. Next we characterize the efficient levels of extractions by users and outflows from sources. We provide a graph decomposition which divides the network into regions according to the availability of sources. Then the efficiency problem can be solved region by region.
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I am grateful to Antoni Calvó-Armengol for his guidance and supervision. I would like to thank to an anonymous referee whose comments helped improve the paper substantially. I also thank Francis Bloch, Olivier Bochet, Aytek Erdil, Ayça Giritligil, Guillaume Haeringer, Sjaak Hurkens, Matthew Jackson, Bettina Klaus and Jordi Massó. I gratefully acknowledge the support of the European Community via Marie Curie Grant PIEF-GA-2008-220181.
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Open Access This is an open access article distributed under the terms of the Creative Commons Attribution Noncommercial License (https://creativecommons.org/licenses/by-nc/2.0), which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.
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İlkılıç, R. Networks of common property resources. Econ Theory 47, 105–134 (2011). https://doi.org/10.1007/s00199-010-0520-7
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DOI: https://doi.org/10.1007/s00199-010-0520-7