Joint Exploitation of a Productive Asset: A Game-Theoretic Approach

It is generally believed that when two or more economic agents jointly exploit a common productive asset, there will be a tendency towards overuse or overconsumption, if there is no possibility of making binding commitments regarding the rates of use or consumption. Lancaster (1973) and Levhari and Mirman (1980) have studied specific examples of this phenomenon from a game-theoretic point of view, and in each case demonstrated the existence of a Pareto-inefficient Nash equilibrium of the corresponding dynamic game.