On the effects of a common-pool resource on cooperation among firms with linear technologies

TL;DR

This paper examines how external management of shared natural resources influences firm cooperation, using a model with linear technologies and game theory to analyze stable allocations under various conditions.

Contribution

It introduces a model analyzing the impact of resource management on firm cooperation with a focus on linear technologies and game-theoretic stability.

Findings

Stable allocations exist under certain conditions

Games in partition function form naturally arise

Analysis applies to both certain and uncertain scenarios

Abstract

In this paper we study the effect that the external management of a limited (natural) resource such as carbon dioxide or water quotas has on the behaviour of firms in a given sector. To do this, we choose a model in which all firms have the same technology and this is lineal. In the analysis of the problem games in partition function form arise in a natural way. It is proved, under certain conditions, that stable allocations exist in both cases with certainty and uncertainty.