Policy effectiveness in spatial resource wars: A two-region model

Abstract

We develop a spatial resource model in continuous time in which two agents strategically exploit a mobile resource in a two-region setup.To counteract the overexploitation of the resource (the tragedy of commons) that occurs when players are free to choose where to harvest, the regulator can establish a series of spatially structured policies. We compare the equilibria in the case of a common resource with those that emerge when the regulator either creates a natural reserve, or assigns Territorial User Rights to the players.We show that, when technological and preference parameters dictate a low harvesting effort, the policies are ineffective in promoting the conservation of the resource and, in addition, they lead to a lower payoff for at least one of the players. Conversely, in a context of higher harvesting effort, the intervention can help to safeguard the resource, preventing extinction while also improving the welfare of both players.