The commons problem in the presence of negative externalities

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nahid Masoudi ◽  
Donique Bowie
Keyword(s):  
Empirical Literature ◽  
Theoretic Model ◽  
Negative Externalities ◽  
Content Type ◽  
Common Pool ◽  
Markov Perfect ◽  
Scale Down ◽  
The Commons ◽  
Game Theoretic ◽  
Harvest Decisions

PurposeWhile the commons problem and the issues related to the negative externalities of harvesting have been studied extensively, there remains a need to bridge these two streams of studies to comprehensively investigate the implications of the strategic interactions among resource harvesters in the presence of such negative externalities. This paper aims to fill this gap.Design/methodology/approachThe authors study a common-pool harvest problem when the extractive activities leave behind negative externalities which affect the resource growth rate and reduce the stock beyond the extracted levels. Markov perfect noncooperative and optimal solutions are presented under different scenarios regarding considerations of negative externalities into harvest decisions.FindingsResults of the study suggest that, in the presence of such externalities, all parties must scale down their extraction in accordance with their externalities. The resource can be preserved by implementation of such harvest rule. However, failure to incorporate the externalities exacerbates the commons problem and can even lead to exhaustion of the biomass even if countries manage to cooperate and coordinate their harvest. Suggesting that if such externalities are large enough – which empirical literature suggests they are – then recognition and consideration of these externalities in the harvest decisions is as crucial as cooperation.Originality/valueThis paper provides a framework that is capable of incorporating the negative externalities of harvest activities into a bioeconomic game theoretic model and thereby providing a more real-world representation of the state of the common-pool resource management. While, the authors extend a well-known simple model, the model of this research study has the capacity to explain the widespread incidences of resource collapses. Therefore, the important policy implication is that agents should rigorously work together to understand the extent of the negative externalities of their harvests on the resources.

Managing Congestion in Matching Markets

2021 ◽  
Author(s):  
Nick Arnosti ◽  
Ramesh Johari ◽  
Yash Kanoria
Keyword(s):  
Problem Definition ◽  
Theoretic Model ◽  
Matching Markets ◽  
Contact Potential ◽  
Managerial Implications ◽  
The Commons ◽  
Game Theoretic ◽  
Face Search ◽  
Uniqueness Of Equilibrium ◽  
Never Screened

Problem definition: Participants in matching markets face search and screening costs when seeking a match. We study how platform design can reduce the effort required to find a suitable partner. Practical/academic relevance: The success of matching platforms requires designs that minimize search effort and facilitate efficient market clearing. Methodology: We study a game-theoretic model in which “applicants” and “employers” pay costs to search and screen. An important feature of our model is that both sides may waste effort: Some applications are never screened, and employers screen applicants who may have already matched. We prove existence and uniqueness of equilibrium and characterize welfare for participants on both sides of the market. Results: We identify that the market operates in one of two regimes: It is either screening-limited or application-limited. In screening-limited markets, employer welfare is low, and some employers choose not to participate. This occurs when application costs are low and there are enough employers that most applicants match, implying that many screened applicants are unavailable. In application-limited markets, applicants face a “tragedy of the commons” and send many applications that are never read. The resulting inefficiency is worst when there is a shortage of employers. We show that simple interventions—such as limiting the number of applications that an individual can send, making it more costly to apply, or setting an appropriate market-wide wage—can significantly improve the welfare of agents on one or both sides of the market. Managerial implications: Our results suggest that platforms cannot focus exclusively on attracting participants and making it easy to contact potential match partners. A good user experience requires that participants not waste effort considering possibilities that are unlikely to be available. The operational interventions we study alleviate congestion by ensuring that potential match partners are likely to be available.

A game-theoretic model for roadway performance management

2014 ◽  
Vol 4 (1) ◽  
pp. 40-54 ◽  
Author(s):  
Hesham Osman ◽  
Mazdak Nikbakht
Keyword(s):  
Asset Management ◽  
Decision Makers ◽  
Theoretic Model ◽  
Theoretic Approach ◽  
Political Decision ◽  
Content Type ◽  
Road Users ◽  
Game Theoretic ◽  
The Impact ◽  
Asset Managers

Purpose – The purpose of this paper is to present a socio-technical approach to modeling the behavior of roadway users, asset managers, and politicians toward roadway performance and asset management. This approach models the complex interactions that occur between these agents in a complex system. Most modeling approaches in the domain of infrastructure asset management take a purely asset-centric approach and fail to address these socio-technical interactions. Design/methodology/approach – Interactions among political decision makers, asset management strategy developers, and road users are modeled using a game-theoretic approach. The interactions are modeled as a non-cooperative game in which politicians, asset managers, and road users are the main players. Each player is autonomous and aims to come up with the set of moves to maximize their respective level of satisfaction in response to other players’ moves. Multi-attribute utility theory is used to deal with multitude of players’ goals, and the Nash equilibria of the game are south out to develop appropriate strategies for different players. Findings – An illustrative example for a road network of a Canadian city is used to demonstrate the developed methodology. The developed methodology demonstrates how behaviors of various agents involved in the sphere of asset management impacts their collective decision-making behavior. Originality/value – The developed framework provides asset managers and political decision makers with a valuable tool to evaluate the impact of public policy decisions related to asset managers on road performance and the overall satisfaction of road users.

scholarly journals The world's biomes and primary production as a triple tragedy of the commons foraging game played among plants

2016 ◽  
Vol 283 (1842) ◽  
pp. 20161993 ◽  
Author(s):  
Gordon G. McNickle ◽  
Miquel A. Gonzalez-Meler ◽  
Douglas J. Lynch ◽  
Jennifer L. Baltzer ◽  
Joel S. Brown
Keyword(s):  
Primary Production ◽  
Tragedy Of The Commons ◽  
Plant Production ◽  
Root Production ◽  
Theoretic Model ◽  
Theoretic Approach ◽  
Evolutionarily Stable Strategies ◽  
The Commons ◽  
Game Theoretic ◽  
Tissue Production

Plants appear to produce an excess of leaves, stems and roots beyond what would provide the most efficient harvest of available resources. One way to understand this overproduction of tissues is that excess tissue production provides a competitive advantage. Game theoretic models predict overproduction of all tissues compared with non-game theoretic models because they explicitly account for this indirect competitive benefit. Here, we present a simple game theoretic model of plants simultaneously competing to harvest carbon and nitrogen. In the model, a plant's fitness is influenced by its own leaf, stem and root production, and the tissue production of others, which produces a triple tragedy of the commons. Our model predicts (i) absolute net primary production when compared with two independent global datasets; (ii) the allocation relationships to leaf, stem and root tissues in one dataset; (iii) the global distribution of biome types and the plant functional types found within each biome; and (iv) ecosystem responses to nitrogen or carbon fertilization. Our game theoretic approach removes the need to define allocation or vegetation type a priori but instead lets these emerge from the model as evolutionarily stable strategies. We believe this to be the simplest possible model that can describe plant production.

Coordination mechanisms for digital and sustainable textile supply chain

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Patanjal Kumar ◽  
Dheeraj Sharma ◽  
Peeyush Pandey
Keyword(s):  
Supply Chain ◽  
Deterministic Model ◽  
Virtual Organization ◽  
Supply Chain Coordination ◽  
Theoretic Model ◽  
Theoretic Approach ◽  
Sustainable Supply Chain ◽  
Content Type ◽  
Coordination Model ◽  
Game Theoretic

PurposeSupply chain network is complicated to manage due to the involvement of a number of agents. Formation of virtual organization using Industry 4.0 (I4.0) is an approach to improve the efficiency and effectiveness and to overcome the complexities of the channel. However, the task of managing the channel further becomes complicated after incorporating sustainability into the supply chain. To fill this gap, this paper focuses on designing of mechanism and demonstration of I4.0-based virtual organization to coordinate sustainable supply chain.Design/methodology/approachIn this paper, we model and compare I4.0-based virtual organization models using four other traditional contracts with centralized supply chain. The non-cooperative game theoretic approach has been used for the analysis of models.FindingsOur game-theoretic analysis shows that investment in I4.0 and sustainable innovation are beneficial for the overall supply chain. Our results show that linear two-part tariff contract and I4.0-based virtual organization model can perfectly coordinated with the supply chain.Research limitations/implicationsThis study consider deterministic model settings with full information game. Therefore researchers are encouraged to study I4.0-based coordination models under information asymmetry and uncertain situations.Practical implicationsThe paper includes implications for the development of I4.0-based coordination model to tackle the problems of channel coordination.Originality/valueThis study proposes I4.0-based game-theoretic model for the sustainable supply chain coordination.

Does channel decentralization lead to low quality product lines?

2014 ◽  
Vol 48 (9/10) ◽  
pp. 1870-1891 ◽  
Author(s):  
Hwan Chung ◽  
Eunkyu Lee
Keyword(s):  
Product Line ◽  
Channel Structure ◽  
Theoretic Model ◽  
Product Lines ◽  
Content Type ◽  
Product Line Design ◽  
Quality Product ◽  
Game Theoretic ◽  
Heterogeneous Consumers ◽  
Line Design

Purpose – The purpose of this study is to analyze the problem of optimal product line design in marketing channels. Design/methodology/approach – This paper develops a game theoretic model, in which a firm markets a line of a limited number of products at different quality levels to serve a market composed of multiple consumer segments. The consumer segments are modeled as clusters of somewhat heterogeneous consumers as typically observed in the real world. These model characteristics allow us to consider a broader set of targeting strategies such as sub-segmentation and partial cannibalization which have not been considered previously. By considering both a vertically integrated channel and a decentralized channel, we investigate how channel structure influences optimal product line design. We analyze the model mathematically with supplemental numerical analyses. Findings – Our analysis shows that “quality distortion” in product line design is not limited to the low-end product, as previously reported, but can happen to the high-end product. The direction of these quality distortions may be downward or upward, leading to either increased or decreased differentiation between the two products. Furthermore, channel decentralization makes it more likely for the firm to strategically choose upward partial cannibalization or sub-segmentation. Consequently, contrary to previous studies, we demonstrate that there exist conditions under which channel decentralization leads to higher product quality. Originality/value – Our model reflects a more realistic market environment and a firm’s practical constraints than previous studies, which typically assume perfect homogeneity within each segment and/or the feasibility of offering an infinite number of products. This extension produces interesting new results and insights that provide more practical implications for a firm’s optimal product line design strategy.

Averting a tragedy of the commons: revenue sharing and competitive balance in the NHL

2018 ◽  
Vol 8 (1) ◽  
pp. 35-51 ◽  
Author(s):  
Kenneth M. York ◽  
Cynthia E. Miree
Keyword(s):  
Revenue Sharing ◽  
Tragedy Of The Commons ◽  
Labor Policy ◽  
Collective Bargaining Agreement ◽  
Competitive Balance ◽  
Common Pool Resource ◽  
Effective Management ◽  
Content Type ◽  
Common Pool ◽  
The Commons

Purpose The purpose of this paper is to measure the effect of the National Hockey League (NHL) collective bargaining agreement (CBA) of 2005 between the NHL owners and the NHL Players Association, to determine whether competitive balance in the NHL increased after the CBA. Design/methodology/approach Competitive balance in the NHL was compared between 11 seasons before the NHL Lockout Season in 2004-2005 and 11 seasons after, with a new CBA and a new revenue sharing plan. Competitive balance was measured in multiple ways, within seasons, across multiple seasons, by the margin of victory in individual games, by the concentration of teams winning and playing in the NHL championship, in the correlation of winning percentage of a season with subsequent seasons, and the number of consecutive winning or losing seasons. Findings There was greater competitive balance after the Lockout Season and the new CBA than before on all of the measures of competitive balance. The NHL has found a management solution to the effective management of a common pool resource and avoided a tragedy of the commons. Practical implications While this research builds on previous work which examines the presence of competitive balance in the NHL, it encourages those engaged in labor policy to consider not only the merit of design when negotiating labor policy, but also to explore the impact of policy on organizational outcomes over time. Originality/value This paper combines perspectives and insights from multiple disciplines including economists’ ideas about competitive balance in a sports league, ecologists’ ideas about effective management of a common pool resource, and strategic management ideas about management solutions to a sustainability problem.

State Intervention in Collective Action

2021 ◽  
pp. 33-53
Author(s):  
Calla Hummel
Keyword(s):  
Collective Action ◽  
Multiple Equilibria ◽  
State Intervention ◽  
Theoretic Model ◽  
Negative Externalities ◽  
Informal Workers ◽  
The World ◽  
Game Theoretic ◽  
Game Theoretic Model ◽  
Different Levels

Chapter 2 develops a theory of state intervention in collective action. It argues that as unorganized people create negative externalities, officials increasingly have an incentive to encourage people who organize self-regulating organizations. When officials intervene with cash, licenses, and access to the bureaucracy, they lower the barriers that kept people from organizing on their own. Once informal workers take these incentives and start organizations, officials can bargain over regulation and enforcement with representatives instead of a mass of individuals. The theory builds on contributions from Olson (1965), Ostrom (1990), and Holland (2017). The theory is formalized in a game theoretic model to show that officials and informal workers are strategically linked. The chapter uses the model to demonstrate the exact conditions under which we can expect informal workers’ organizations as a result of officials’ encouragement. The model produces multiple equilibria that reflect the different levels of organization that we observe in informal sectors around the world. The equilibrium conditions generate clear expectations for the patterns that we should see in the empirical chapters if the theory is correct.

A game-theoretic approach to evaluating the competitiveness of container carriers in the Northeast Asian shipping market

2017 ◽  
Vol 29 (4) ◽  
pp. 854-869 ◽  
Author(s):  
Byung-In Park ◽  
Hokey Min
Keyword(s):  
Game Theory ◽  
Asia Pacific ◽  
Theoretic Model ◽  
Theoretic Approach ◽  
Maritime Logistics ◽  
Actual Case ◽  
Content Type ◽  
Game Theoretic ◽  
Northeast Asian ◽  
Pricing Schemes

Purpose In times of increasing shipping risks and uncertainty, the purpose of this paper is to analyze fiercely competitive shipping markets in the Asia-Pacific region and help the carriers develop the optimal pricing schemes, shipping networks (e.g. routes and shipping frequency), and future investment plans. Design/methodology/approach This paper develops viable maritime logistics strategies based on the non-cooperative game theory which determines the optimal vessel size/type, shipping route, and shipping frequency, while taking into account multiple cost components and unpredictable shipping market dynamics. Findings This study revealed that the container carrier’s optimal shipping strategy was insensitive to changes in freight rates, fuel prices, and loading/unloading fees at the destination ports. However, it tends to be more sensitive to an increase in the shipping volume than the aforementioned parameters. In other words, aggressive pricing schemes and drastic cost-cutting measures alone cannot enhance carrier competitiveness in today’s shipping markets characterized by overcapacity and weak demand. Originality/value This paper is one of a few attempts to identify a host of factors influencing the container carrier’s competitiveness using the game theory and develop an optimal shipping strategy in the presence of conflicting interests of multiple stakeholders (e.g. carriers, shippers, and port authorities). To validate the rigor and usefulness of the proposed game-theoretic model, the authors also experiment it with an actual case study of container carriers serving the Northeast Asian shipping market.

Understanding Investor Behavior in the Recent Global Land Rush

2018 ◽  
Vol 9 (1) ◽  
Author(s):  
Alfredo R. M. Rosete
Keyword(s):  
Land Rights ◽  
Investor Behavior ◽  
Empirical Literature ◽  
Theoretic Model ◽  
Sharp Rise ◽  
Land Acquisitions ◽  
Global Land ◽  
Game Theoretic ◽  
Credible Threat ◽  
Game Theoretic Model

Abstract A sharp rise in land acquisitions in developing countries during the last decade has drawn the attention of scholars and think tanks. Recent empirical literature finds that investors acquiring land tend to target countries that have little regard for local land rights. This is a puzzle. By locating in such countries, investors may be foregoing other advantages that generate more revenue. In this paper, I provide an explanation of investor behavior using a game-theoretic model where investors can use expropriation as a credible threat vis a vis smallholders. I show that the credible threat of expropriation lowers the investor’s cost of locating to a country by reducing the necessary remuneration to smallholders for access to land, resulting in adverse incorporation. Further, I demonstrate that investors will locate in countries with weak land governance whenever they anticipate similar levels of revenue or investor protection.

scholarly journals The Role of Problem Specification in Crowdsourcing Contests for Design Problems: A Theoretical and Empirical Analysis

2020 ◽  
Author(s):  
Zhaohui (Zoey) Jiang ◽  
Yan Huang ◽  
Damian R. Beil
Keyword(s):  
Problem Definition ◽  
Empirical Literature ◽  
Theoretic Model ◽  
Real World Data ◽  
Solution Quality ◽  
Design Problems ◽  
Managerial Implications ◽  
Game Theoretic ◽  
Types Of Information

Problem definition: This paper studies the role of seekers’ problem specification in crowdsourcing contests for design problems. Academic/practical relevance: Platforms hosting design contests offer detailed guidance for seekers to specify their problems when launching a contest. Yet problem specification in such crowdsourcing contests is something the theoretical and empirical literature has largely overlooked. We aim to fill this gap by offering an empirically validated model to generate insights for the provision of information at contest launch. Methodology: We develop a game-theoretic model featuring different types of information (categorized as “conceptual objectives” or “execution guidelines”) in problem specifications and assess their impact on design processes and submission qualities. Real-world data are used to empirically test hypotheses and policy recommendations generated from the model, and a quasi-natural experiment provides further empirical validation. Results: We show theoretically and verify empirically that with more conceptual objectives disclosed in the problem specification, the number of participants in a contest eventually decreases; with more execution guidelines in the problem specification, the trial effort provision by each participant increases; and the best solution quality always increases with more execution guidelines but eventually decreases with more conceptual objectives. Managerial implications: To maximize the best solution quality in crowdsourced design problems, seekers should always provide more execution guidelines and only a moderate number of conceptual objectives.

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